Gold benefitted from safe-haven demand after news that North and South Korea had exchanged fire at South Korea’s Yeonpyeong Island, says a research note from MKS Finance. But after gold spiked to $1,370 an ounce, losses in commodities weighed down precious metals generally, especially since geopolitical news tends to cause “knee-jerk” reactions in gold that are often not sustained, MKS says. Still, fears that the euro-zone debt crisis could spread from Ireland also continued to support gold. Long liquidation set in, but safe-haven demand continued, causing gold to climb to 1,029 euros, which caused stops to be triggered.
This added further momentum to the rise, with the metal hitting $1,382. Still, MKS concluded: “While the yellow metal moved higher today, the long Thanksgiving holiday weekend in the U.S., the proximity of year-end and the fear of Chinese tightening could tempt investors to accelerate their profit-taking process.”
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