Despite having lost roughly 2 percent of their value this week, gold futures still climbed in value on Friday, according to MarketWatch. The trading session saw the precious metal ebb and flow as European leaders at the Brussels summit did not unanimously agree to a new fiscal treaty.
However, the leaders are committed to consider the prospects of a deal between governments that does not include all member nations.
The precious metal is forecast to continue rising next week, according to the majority of respondents in a Bloomberg poll. Of 26 subjects surveyed by the news service, 18 pegged the yellowish metal to climb. That 69 percent support for gold futures' climb represents the top proportion since early last month.
The sovereign debt scourge has been so vigorous that its offshoots now threaten the top credit ratings of the euro zone's two top economies. Both Germany and France, respectively the region's biggest and second-largest economies, are on notice for Standard & Poor's dropping their AAA rating, according to Bloomberg.
On Thursday, the European National Bank dropped interest rates by 0.25 percentage points to 1 percent, marking the second consecutive month of efforts to encourage growth. The allure of gold increases as a consequence and investors then earn money on the precious metal gaining value.
"People are buying out of concern, out of fear," executive director Mark O’Byrne with brokerage GoldCoretold Bloomberg. Central banks "are all pursuing extremely loose monetary policies and we still have negative real interest rates. That makes gold attractive."
During the three trading sessions after the ECB's rate reduction on November 3, gold futures climbed 3.6 percent.
At 3:39 p.m. on Friday, gold futures rose 0.11 percent, a $1.80 rise to $1,715.20 per troy ounce.
During the third quarter of 2011, demand for bars and coins of gold in Europe more than doubled to 118.1 tons as compared to one year prior, according to information from the World Gold Council. O'Byrne, from GoldCore, said clients in the European Union opened more accounts with his service last week than any time previously. He also said that could continue this week.
But Reuters reports gold's performance during three of the past four weeks has resulted in losses. Investors have kept a close eye on developments in the euro zone as pessimism pervades regarding an ability to challenge the two-year-old debt scourge that is attacking banks and public finance systems.
The EU opted to draft a new treaty that encourages European nations to share a closer fiscal union. The snag of that historic pact was the exclusion of Britain, which could end up being enormously harmful since the third largest of the region's economies has declined to join the remaining 26 nations that are among that accord.
"There is a greater correlation toward the end of the year as most commodities, including gold, are headline correlated. As investors begin to trade into the new year, gold will climb higher with possible inflation growing," precious metal broker Carlos Perez-Santalla with PVM futures told Reuters.
After having kicked off the year at roughly $1,400 per troy ounce, the precious metal touched its all time high of $1,923.70 per troy ounce on September 6.
Bullion is about three weeks from achieving an 11th consecutive year of annual gains.
But one commodities trader said investors in gold are likely to hold off larger purchases before the end of 2011.
"The markets are digesting the European news, which has so far been inconclusive. Gold investors are going to be deferring making major decisions … until after the new year," commodities trader George Nickas with broker INTL FCStone told Reuters.
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