Gold making headway

As the major economies continue to wrangle with fiscal and economic woes, investors have a strong reason to keep their interest alive in gold-a panacea for wealth protection.
Gaining benefits from global financial disturbance, the metal price has risen by around 4 percent when June began. Gold prices reached around $1,627 per oz at the end of the last week. However, at the current level, prices are 9 percent below this years peak of $1,781 per oz touched in February.
A word stimulus has much to do with building bullish stance on gold. Fears stemming from slowdown in US and China, which point towards the need to grease the cogs of economic wheels, have been compelling investors to err on the side of caution.
Earlier this month Chinas central bank made a surprise move after it announced a cut in interest rate the first time since 2008. While release of weaker US job data has fuelled negative sentiments.
Above that, insurmountable fiscal problems in Greece, including the scheduled election on June 17, have lifted resistance level for gold.
"Whatever the outcome in Europe, it will likely be supportive for gold," said Neil Gregson, who manages about $6.9 billion of natural-resources equities at JPMorgan Asset Management in London to international news agency. "Weve still got the possibility of QE3 in the US, which would be good for gold."
Societe Generale, a large European financial institution, forecasts gold averaging $1,700 per oz and $1,760 per oz in the third and fourth quarters, respectively.
According to a weekly gold survey, dated June 15, 2012, conducted by Kitco, a precious metals retailer, out of 23 participants 18 respondents voted for prices rise in the forth coming week; while three see prices down, and two were neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
"Those who see weaker prices said people are too optimistic over the Greek elections. They expected a flight-to-safety move to the dollar and not gold, to be the result, similar to when problems rose in Europe. A trip back to the $1,580 might not be out of the question," they say according to the survey.
Central banks also stayed active in gold buying as they increase their gold reserves by around 135 tonnes of gold during the first four months of the current year, according to the data compiled by The World Gold Council, a non-profit association of the worlds leading gold mining companies.
Lately, Kazakhstans central bank revealed its intention to increase the share of gold in its foreign reserves to 20 percent from existing 15 percent.
Holdings in SPDR Gold Trust, the worlds largest gold-backed exchange-traded fund, stood at 1,277 tonnes as on June 15, 2012, as opposed to 1,254.57 tonnes at the end of December 2011.