Gold at months high, Istanbul bourse gains

ISTANBUL- Hürriyet Daily News

A consumer looks at the display window of a jewelry in Istanbul. The decrease in the greenbacks value is pushing the gold prices up, an Istanbul-based economist says. DAILY NEWS photo, Hasan ALTINIŞIK

Gold was steady yesterday at a three-and-a-half month high, which was hit during the previous session, as investors remained hopeful the European Central Bank (ECB) would soon take action to contain the region’s debt crisis, according to Reuters.

Recent media reports said the ECB has been mapping out details to cap Spanish and Italian borrowing costs, easing investor worries about the eurozone’s festering problems.

Spot gold was little changed at $1,638.49 an ounce during the day, not far from a three-and-a-half month high of $1,641.20 that was hit in the previous session. The U.S. gold futures contract for December delivery edged down 0.1 percent to hit $1,641.20, information showed.

Technical indicators suggest spot gold could rise to $1,647, with any break above that level possibly propelling prices to $1,664, Reuters market analyst Wang Tao said.

Rising holdings of exchange-traded gold funds also reflect improved sentiment. Holdings of the SPDR Gold Trust, the world’s biggest gold ETF, have been climbing since the end of July and hit 1,278.962 tons by Aug. 21, the highest since early July.

Tufan Cömert, a strategist at the Garanti Investment, thinks several factors contributed to the increasing gold prices.

Decrease in value of the U.S. dollar and expectations regarding additional liquidity measures in China that may give a green light for the next quantitative easing policy have helped gold prices climb up, Cömert told daily Hürriyet yesterday.

In a long term perspective gold prices are still very cheap, he said. “Gold prices may increase further by the year as the fiscal cliff will be a hot topic in the United States, causing possible market volatility.”

The increase in gold prices stem from the demands of central banks in developing countries and investors as trust in major currencies falls, according to a survey by the Coutts & Co., a subsidiary of the Royal Bank of Scotland.

Istanbul bourse on rise
Meanwhile, banking stocks pushed the Istanbul stock Exchange (ISE) above 66,200, the highest level since May 13. The average rise in value of the stocks traded on the ISE, which hit 66,240 points, was 0.72 percent. The index closed the day at around 66.108 points.