The price of gold is set for its strongest two day rally in ten weeks on Wednesday after an agreement in principle among European leaders to ban Iranian oil imports boosted the oil prices and lifted gold prices to two week highs.
Latest Gold Futures Price
Spot gold futures was last up 0.4 percent on the day at $1,607.90 per ounce by 15.30 GMT, having risen by as much as 0.8 percent to a session high of $1,614.08, while most active COMEX February gold futures were up 0.6 percent at $1,609.32 per ounce.
Impact on Oil and Gold Prices
The decline in gold prices towards the end of 2011 appears to have lured some buyers out of the woodwork following a fairly lacklustre previous few weeks, due in large part to the weakness in the Indian rupee against the dollar, which suppressed demand in the world’s largest consumer of gold.
“With 40 percent of the world’s internationally traded oil moving through the Strait of Hormuz, even a low probability of the strait’s closure can have a material impact on oil and hence on gold prices.” James Steel, analyst at HSBC, said.
Betting On Gold Prices
Gold outshone other asset classes last year and it is expected to continue its uptrend in the long term, but in the short term, some investors still remain cautious to buy back into the precious metal.
However, when gold and silver prices were falling in the autumn of last year, some traders went long in the gold/silver ratio and made money. This is a curious case of an investor making money by going long in underlying commodities, the prices of which were falling.
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Gold price sees strongest rally in ten weeks on Iran oil import ban
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