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WGC Lists Bullish Factors for Gold in Second Half of 2012
The World Gold Council, a market-development organization for the gold industry, lists a number of factors that supportive for gold in the second half of 2012.
According to WGC’s quarterly report on investment trends, the lower global inflation in the second quarter contributed to a price pullback in the yellow metal. However, as a result, further fiscal and monetary stimulus may mean more debasement of currencies through unconventional monetary policy and an increased risk of future inflation.
Underlying structural issues in the eurozone are unresolved, meaning investors may continue to seek gold to diversify risk and preserve capital.
“The flight to the U.S. dollar as a safe-haven in the first half of 2012 could be reversed. The U.S. debt ceiling debate in Q3 and federal elections in November, followed by the necessity to confront a US$1.3tn budget deficit, will prove challenging to the U.S. dollar. With most currencies under pressure in one form or another, gold is likely to provide a hedging mechanism for investors,” WGC added.