Gold Bullion Buoyed by Broad Risk Aversion


"Gold bullion extended Friday's late recovery in overnight trading. . ."

Gold bullion extended Friday's late recovery in overnight trading, climbing to a daily high of $1433.50/oz. before easing in the wake of the Bank of Japan's liquidity injection, which helped to calm market jitters. However, the most active contract for April delivery has remained in range to those highs ever since, lingering around $1425/oz. in early trading over North America.

The disaster in Japan has added another layer of uncertainty to an already-fragile market sentiment in light of tensions in the Middle East and North Africa, as well as re-emerging eurozone debt concerns. Investors are now pulling back from risky positions and taking refuge in safe-havens like the yellow metal, nervous that recent events could stall the recovery in Japan and more broadly across the globe.

In Europe, EU officials made what is seen as partial progress in regards to strengthening a rescue package for indebted nations in the periphery, but doubts still remain ahead of a more crucial meeting in two weeks. In particular, ministers agreed to increase lending capacity to a full 500 billion, yet poignantly rejected proposals to purchase bonds on secondary markets directly from investors.

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