More upside than downside risk for gold at the moment

Gold continued to surge higher in mid-day trading on Thursday, as the spot price climbed $38.93, or 2.5%, to $1,578.85 per ounce.  In doing so, the yellow metal was on pace for its best day since a 2.7% rise on January 25, 2012.

The rally in gold was fueled by several worse than expected U.S. economic reports – including Weekly Jobless Claims, the Philadelphia Fed Index, and Leading Economic Indicators.
Commenting on the strength in gold, Afshin Nabavi – head of trading at MKS Finance – stated in a Reuters report that ”Since yesterday we have seen more interest come through from physical buyers…because prices have come down substantially.”

“But there is more upside than downside risk for gold at the moment as the political situation is very jittery with tension in Iran and economic problems especially in the euro zone,” Nabavi added. “People will want to buy physical gold again. Those who went out since December are now waiting for prices to stabilize before getting in again.”

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