Societe Generale on Tuesday said that short covering in gold likely to continue.
In an interview to CNBC-TV18, Robin Bhar, analyst, said, "There is some risk aversion rushing through the markets. We have seen equity markets in the US, Asia and now Europe falling. So clearly there is some uncertainty over both equity markets and also over global economic growth which seems now to have peaked. Question is how much of a slowdown we will get and that has seen some safe haven flows coming back into gold. I think a lot of it is short covering if you look at positioning on the Comex market in New York."
"So, we are seeing gold rally from $1,160 per ounce, which was hit a few months ago and now we are back above the 100 day moving average of around $1,225 per ounce. I think it can continue," he added.
"I think there is heightened uncertainty over the global economy, the slowdown in China and equity markets seem to be falling as well with the ongoing uncertainty. The dollar is strong, but gold is doing well in spite of the strong dollar and rising interest rates. However, may be the Fed's rate hiking cycle is now priced into gold and so we should get more covering," Bhar said.
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