Gold fell on Tuesday after trading above $1,800 an ounce for the first time in seven weeks, but experts say the precious metal may be ready to keep soaring, pushed by Europe’s debt crisis.
"What I like is that it's been a steady climb higher for gold," NYMEX floor trader Mihir Dange of Arbitrage LLC tells CNBC. Since dipping to $1,535 six weeks ago, gold has gained $256.
"Even Germany wants to hold on to its gold," Dange says.
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German newspapers recently reported that the Group of 20 nations discussed the idea of German gold being used to back Europe’s bailout fund, but that senior German officials nixed the idea.
|(Associated Press photo)
In Europe, rival Greek political parties are working out details on a coalition government, but the country isn’t even assured yet of receiving the next portion of its bailout.
Meanwhile, worries have spread to Italy. "The train goes from Athens to Rome, and possibly Madrid could be next," commodity analyst Bill O'Neill of Logic Advisors tells CNBC.
"There is tremendous uncertainty and the lack of desire to hold any currency. That is the primary reason for the strength in gold."
Gold reached an all-time high above $1,920 an ounce in early September before retreating as much as 20 percent.
"It feels like with the current situation in the euro zone, gold should be able to break the all-time highs quite soon and probably end the year around the highs for the year or even at new highs," said MKS Finance head of trading Afshin Nabavi.
And Europe’s crisis won’t magically evaporate.
“The problems in Europe are not disappearing in a hurry, and there is so much confusion,” Thorsten Proettel of Landesbank Baden-Wuerttemberg tells Bloomberg.
“There is a basis for gold to continue to rise.”
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