Hopes of China and Europe easing their monetary policies in the future to stimulate their respective economies lifted the precious metal higher for the second consecutive week.
Spot prices settled to a one - month high on Thursday, reaching $1661.70, only to be met with faded optimism on Friday. Reports released by France’s finance ministry on Friday say Standard & Poor’s have stripped the country of its triple A rating, dealing a heavy blow to the already struggling Eurozone.
A weaker than expected bond auction in Italy (that failed to live up to the Spanish sale) also weighed on the price. Lately, gold prices have been sharing a positive correlation with the euro and any pessimistic news from the struggling Eurozone only pushes the price lower for the yellow metal.
The decrease on Friday ended a three - day rally, as the dollar gained strength following the report from Standard and Poor’s. Lacking the safe haven characteristic, France’s downgrade saw many investors reduce holdings of gold.
Looking ahead, traders remain bullish on gold after reports showed Mainland China imported a record level of gold from Hong Kong in November.
The recent spike in demand has placed China in front of India, as the largest consumer of the metal.
Courtesy: CPM Group for DGCX
