LONDON, Dec. 27 (UPI) -- Gold is gaining ground among investors in Europe amid continuing concerns over the final toll of sovereign debt defaults or rescue packages aimed at forestalling crises over country debts.
Gold began gaining ground after the debt crisis in Greece early in 2010 and has continued drawing investors amid worries over other EU member countries, including Hungary, Ireland, Italy, Portugal and Spain.
Gold prices began showing occasional surges in Europe in a general flight from risk in response to perceived and recorded weaknesses of the euro against the U.S. dollar, analysts said. Added to these were weightier concerns over the European countries' sovereign debt.
While in November investors sought protection against the crisis in Ireland this month they took shelter in gold in response to continuing uncertainty of developments in Portugal and Spain, analysts said.
Hopes that EU authorities could provide a firewall between the crisis-ridden nations and other EU members weren't fulfilled by political and economic developments.
Gold was also buoyed by escalating tensions on the Korean Peninsula and spot gold in London traded in brackets of $1,375-$1,425 per ounce or more. Analysts said volatile currencies and low interest rates would likely boost the upside potential for gold in 2011.
Gold's sharp rise is delivering hefty profits to some of the world's largest hedge fund managers, the Financial Times reported. It cited hedge fund managers that had invested heavily in gold as a way of betting that central banks would fail to preserve the value of paper currencies.
Investors cited in the media said the current slight decline in gold prices would be temporary as the metal was likely to bounce back and go beyond $1,400 an ounce in the new year, with a stronger upward trend likely to occur in Europe.
While the euro has gone down by more than 8 percent in the year to November 2010 the price of gold per ounce has gone up by more than 25 percent during the period, trade figures showed.
Some forecasts suggest the global uncertainties may push gold beyond the $1,400 an ounce threshold to highs of $1,600 an ounce in the new year. The same uncertainties, however, are likely to push palladium and platinum to levels higher than gold.
Both palladium and platinum are used in catalytic converters and are highly prized by the industry, particularly automobile industry. The widespread use of palladium and platinum in a vast range of industries and its short supplies worldwide already has drawn gold investors into the platinum group of metals, which includes rhodium, ruthenium, iridium and osmium.
The gold market data showed the trends in the movement of gold prices directly impacted on the prices of the platinum group of metals. A key recent change was a gradual de-linking of price trends in gold and platinum and other commodities -- including oil and natural gas. This showed that gold increasingly was adopted by investors as a shelter against risk.
Added to shifts in European investing trend in favor of gold was a continuing upsurge in both public and private gold buying in China and a steady demand in South Asia. The increased European interest in gold was having a knock-on effect on other regional gold markets, analysts said.
