The price of gold topped $1,700 an ounce Monday, as investors continue to place their confidence in metals over currencies. The European Central Bank had attempted to allay fears by widening its bond-buying programs to include Spain and Italy, but traders remain nervous.
“The question right now is if gold will be allowed to move much further. There has been a huge build-up in speculative and long positions across the board over the last couple of weeks, but I suppose that central banks buying more bonds is not helping the overall worry about how the economies are going to do over the months ahead,” Saxo Bank senior manager Ole Hansen told Reuters.
Markets are still waiting for the fallout from Standard & Poor’s Friday downgrade of the United States’ sovereign credit rating, which may or may not impact the U.S. treasury bonds’ status as a “safe haven” for investors.
“Investors are watching for any statement on whether the Fed will ease monetary policy further. The Fed’s $600 billion quantitative easing program, which ended in June this year, has been instrumental [in] gold’s rise, even if adjusted for inflation, the bullion price remains well below the all-time highs above $2,000 in the early 1980s,” the article read.