“Flight to Safety” Seen Driving Gold, Silver Back to April Crash Levels
Wednesday, 28 August 2013
The WHOLESALE price of gold touched its highest level since mid-May in London Wednesday morning, trading briefly at $1433 per ounce before edging $10 lower as European stock markets extended yesterday’s losses.
US crude oil added another 1.2% to hit 2-year highs above $110 per barrel, while silver prices touched $25 per ounce – the best level since this April’s gold crash, when the white metal dropped $4 in two days.
US Treasury bonds also fell Wednesday morning, nudging interest rates higher even German and UK debt prices rose.
“The possibility of US military action against Syria is driving demand for safe-haven assets including gold,” reckons commodities fund manager Jeffrey Sherman at Los Angeles-based $56 billion DoubleLine.
UK prime minister David Cameron said Wednesday he’s pushing for a UN resolution “authorising necessary measures to protect [Syrian] civilians” following this month’s chemical weapons attack.
“This is a classic case of a flight to safety,” agrees Mike Meyer, assistant vice president at EverBank World Markets, talking to CNN.
“The tension in Syria, as well as Egypt a few weeks ago, have set the wheels in motion for gold to rise.”
But “Helped by a thin trading environment, gold was immediately treated as safe haven” after last Friday’s poor US home sales data, says the latest weekly report from German refining group Heraeus.