The financial crisis in Europe is expected to hold up gold prices as investors continue to look for safety in the precious metal.
Gold could move Wednesday as investors await news on a conference call being held between Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and German Chancellor Angela Merkel, Reuters reports.
“People are realizing the euro concept, not just the debt problem, has major flaws and if they are not changing dramatically in the set-up, we are going to end up in a huge crisis. This degradation is happening right now and warranting higher gold prices, ” Dominic Schnider, head of commodity research of UBS wealth management in Singapore, said.
Spot gold prices were up 0.4% to $1840.36 an ounce on Tuesday, reports Rujen Shen for Reuters. The $73 billion exchange traded fund SPDR Gold Shares (NYSEArca: GLD) gained 1% on Tuesday. GLD has gained about 47% over the past 12 months. [A Look at the World’s Largest Gold ETF]
“Technically, we are running into a challenging situation over the next 2-3 days, as the uptrend from the beginning of July faces a short-term correction,” Schnider said. [Gold ETFs Follow Stocks Lower]
A recent breakout in the U.S. dollar may be keeping a lid on gold’s gains. [Investors Sell Gold, Silver ETFs to Cover Losses Elsewhere]