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Gold is above $900 per ounce

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Investors are always evaluating the landscape to determine where they should put their money. With all of the uncertainty in the banking sector, they are moving into gold. In Europe in particular, exchange traded funds increased their holdings to more than 40 million ounces. This has the effect of establishing a cushion under the market.

The spot "gold fix" in London reached an all-time high of $1030.80 per ounce. On the futures market, gold traded above $900.00 per ounce. Traders expect the price to consolidate at these levels and move a bit higher.

Gold is a volatile commodity with price movements often related to "perception" of world financial markets and the relative stability of paper currencies. At present, it seems that they are hedging their bets with gold.

At the moment, gold is a demand driven market. In Q3 demand totaled 1,133.4 tons, up 170.1 tons or 18%. In dollar terms this represents a rise of 51% to 31.8 billion. This is an all time record. Much of the buying is coming from China and India, and as long as this continues the demand side will remain strong.

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Last updated: November 23, 2009: 02:30 PM

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