The gold price has edged higher in European trade today with interest in physical bullion as a haven from risk, as investors worry about the global economic outlook, is supporting the precious metal above the $850 an ounce level.
Investors fretting about the prospects for other asset prices are buying coins and bars, traders said. A dealer said that as in October and November, since the beginning of the week they have seen strong investor demand for physical gold such as physical kilobars and coins.
Interest in physically backed products such as exchange-traded funds, which issue securities backed by physical stocks of gold � has soared. The worlds largest bullion-backed ETF, New Yorks SPDR Gold Trust, said its holdings rose to a record 805,96 tons yesterday!
Gold has tracked its main external drivers, oil and the US Dollar, less this week as safe-haven buying sparked by fears over the global economy has taken centre stage. Gold has defied the US Dollar this week and divorced from oil as the financial crisis sees further bank shares collapse, another analyst said in a daily note. A softer US Dollar tends to support gold, which can be bought as a hedge against weakness in the US currency.
