Despite stronger dollar, gold holds on to last week's rally.
(1888PressRelease) January 10, 2012 - MIAMI, FL - Gold prices retreated slightly over the weekend, after gaining more than 3%, battered by a stronger dollar as the euro staggered to its lowest point against the dollar for 16 months. A high dollar makes gold more expensive for purchasers in other currencies. However, prices held firm, well above $1600, despite the ongoing concerns in Europe. German Chancellor Merkel and French President Sarkozy met today, Monday, apparently growing closer to achieving tighter fiscal union in Europe and promising that the 'haircut' taken by Greek bond holders last year was a one-off occurrence that would not happen in the future.
"The dollar is still perceived as a safe haven, in light of the euro crisis," says Bill Hionas of Pan American Metals of Miami. "The dollar's popularity with investors is serving to cap gold's gains at the moment. However, there are many factors that are working against the dollar, and in favor of gold as a safe haven instead. The looming crisis in Iran, with threatened sanctions on one side and the threat of closing off a major oil route on the other, is just one such factor. There has definitely been some safe-haven demand for gold bullion since news of this situation broke."
The dollar is gaining strength against the euro, rather than because of any amazing progress on the home front. It is a situation that could change at any moment, particularly if the Federal Reserve should decide to inject more money into the system in the coming months.
Pan American Metals of Miami, LLC is a group of traders, investors and account executives that combines many years of experience to help clients invest in bullion. PAMM provides an individual investment service and is based in Miami, Florida for convenient access to both North and South American investors.