Gold rallies for the week, ending slump

AP, Saturday 15 Oct 2011

Demand remains high partly due to economic stimulus efforts in Europe and the US, say analysts

Gold ended higher for the week, putting paid to traders worries that the metal would continue falling from the record high it reached this summer.

Gold for December delivery closed at US$1,683 an ounce Friday. That's about 1 per cent higher than Monday's price of $1670.80.

The price of gold hit a record high of $1,891.90 an ounce on 22 August. Prices have fallen steadily since then. In early October, Credit Suisse analysts warned

the summer's rally in gold prices looked "over-exuberant" in hindsight. That report stoked worries of a crash in gold.

This week's gains suggest that gold may not fall below $1,650 any time soon, said RBC Global Futures analyst George Gero.

Gold demand remains strong in part because of economic stimulus efforts in Europe and the United States, Gero said.

European finance ministers are preparing plans to bail out banks and indebted nations in the region, while the U.S. Federal Reserve Bank is keeping interests rates historically low. Both mean that inflation could increase in the future, Gero said. That makes gold attractive, because many traders buy precious metals as a way to protect against inflation.

That demand could push gold prices back into the $1,700 range within the next few trading days, Gero said. "It looks like we have a higher trading range now for gold," he said.

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