Political risk in Europe is doing anything positive for gold prices

The gold price held firm Thursday morning near $1,597 per ounce amid modest weakness in the U.S. dollar and a rebound in the broader financial markets.  The price of gold clung to a slight gain after weekly U.S. jobless claims came in at 367,000 – in-line with the consensus estimate among economists.

Commenting on the outlook for the price of gold, Nic Brown – Natixis head of commodity research – stated that “It’s not as though the escalation of the political risk in Europe is doing anything positive for gold prices at all, and this is totally different to how we were between 2008 and 2010, when all the correlations were totally reversed and the weakening of the euro actually led to a strengthening in the gold price.”

Brown went on to say that “This very much suggests that we are not getting demand for gold from European investors. The dynamic is purely from the impact of the crisis on to the FX market and from that directly on to the gold price.”

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