Easy-Forex looks at some of the reasons behind the rise in Gold.

Limassol, Cyprus. January 16, 2008 -- Gold surged above $900 a troy ounce for the first time ever as investors on Monday sought refuge from a weakening US dollar and alarm bells about further losses on Wall Street. Gold traded with a low of 893.00 and a high of 914.00.

A number of factors have led to this rise in gold, including the rise in oil and instability of the Middle East. And instability will often drive people to asset havens such as precious metals. Perhaps the most pertinent reason behind gold’s volatility has been due to the battering the US Dollar has been taking against a number of majors. As US interest rates are foreseen to drop by 50 basis points to sit lower than the call rate in the EU.

The likelihood of a 50 basis points cut in the US later this month coupled with the persistence of inflation has fuelled this phenomenal gold rise. It is in a very strong bullish trend now and I would not be surprised to see it above the $1000 level.  
Easy-Forex chief dealer, Michael Konnaris says
“The likelihood of a 50 basis points cut in the US later this month coupled with the persistence of inflation has fuelled this phenomenal gold rise. It is in a very strong bullish trend now and I would not be surprised to see it above the $1000 level.”

The USD weakness continued from last weeks theme following dovish comments by Fed officials, led by Chairman Bernanke that substantial easing may materialize if deemed needed. In U.S. share markets the NASDAQ was up by 91.87 points (+0.98%) whilst the Dow Jones was also up by 171.85 points (+1.36%) at the end of the bell. Crude oil was higher on Monday by US$1.27 a barrel to US$93.96 on the back of other commodities.

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