Gold May Rise on Greek Debt Default Fear–Study

Source:

"Serious sovereign risk to some eurozone countries is finally offering support to gold prices."

Gold may gain as the Greek fiscal crisis increases demand for the precious metal, a survey showed.

Out of 18 traders, investors and analysts surveyed by Bloomberg, 12—or 67%—said bullion would rise next week. Four forecast lower prices and two were neutral. Gold for delivery in June was up 2.2% for this week at $1,150.80 an ounce at 11 a.m. in New York yesterday, near the highest price in almost three months.

Greek bonds dropped for a seventh day yesterday and swaps used to hedge against or speculate on a default by Greece rose to a record on renewed concerns about the country's ability to cut the European Union's largest budget deficit. Prime Minister George Papandreou's government needs to sell 11.6 billion euros ($15.4 billion) of debt by the end of next month.

"Serious sovereign risk to some eurozone countries is finally offering support to gold prices," said Andrey Kryuchenkov, an analyst at VTB Capital in London. "Still, once risk aversion recedes, gold is likely to correct lower. We will be paying much more attention to the actual physical side and consumer demand for gold jewelry as we go forward."

Gold futures reached a record $1,227.50 on Dec. 3 and are up 5% this year. Bullion for immediate delivery reached a record 864.64 euros yesterday.

The weekly gold survey has forecast prices accurately in 174 of 306 weeks, or 57% of the time.

This week's survey results: Bullish: 12 Bearish: 4 Neutral: 2

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