Mac 12: Oil N' Gold Focus: Gold Remains Strong in Europe As Investment Demand Emerges

Gold Remains Strong in Europe As Investment Demand Emerges

Gold price continues to trade higher to 916.2 in European morning. Holdings in SPDR Gold Trust rose to 1038.2 metric tons yesterday, indicating investment demand re-emerges as prices fall below 900 level and stock markets decline.

In fact, gold has been treated as safe haven during economic crisis. Since the last quarter of last year, economists have forecast world economy will face the worst recession since World War II. From central banks' reserves and positions held by institutional investors, we believe major investors in the market have turned risk-averse and investment demand in precious metals should continue to hold up for the rest of the year.

The second Central Bank Gold Agreement (CBGA2) will be expiring Sep 26. In this last year of the agreement, sales of gold have been so far limited. Only France, Netherland and Sweden reported an aggregate of 56 tons gold sales while the remaining 24 tons were sold by unknown source.