It was reported from NEW YORK/LONDON Reuters on Feb 19 that gold prices rose on Friday, reversing early losses fueled by a stronger dollar, as investors bought the metal to hedge against currencies’ volatility and debt default risks in Europe.

U.S. gold futures for April delivery GCJ0 were up $6.50 at $1,125.20 an ounce at 1:09 p.m. EST (1809 GMT) on the COMEX division of the New York Mercantile Exchange.

“Investors are buying gold as a hedge against currencies’ volatility,” said Carlos Sanchez, a metals analyst with CPM Group. “Gold seems to be consolidating near the $1,130 an ounce area.”

Gold priced in euros hit a record high of 826.35 euros an ounce as investors sought to diversify away from the beleaguered single currency.

Spot gold was bid at $1,124.45 an ounce at 1:13 p.m. EST (1813 GMT) against $1,111.40 late in New York on Thursday, having earlier touched a low of $1,098.55.

The metal’s usual relationship with the U.S. currency — strength in which normally weighs on the precious metal — has weakened as fears over the outlook for paper currencies in general lifted interest in bullion as an alternative asset.

The dollar hit an eight-month high against a currency basket on Friday, extending gains after the Federal Reserve’s surprise decision to raise its discount rate, its first hike in the rate since mid-2006.

Debt monsters of the past have tended to end in deflationary depressions, but it’s important to understand that gold can rise in this kind of environment. Remember, gold rises during economic uncertainty. In the early 1930s, for example, during the Great Depression, President Roosevelt raised the price of gold almost 70% from $20.65 to $35 an ounce in a struggle to bring back inflation.

Gold is money. It’s the currency of last resort when monetary times are difficult. So when gold rises in all currencies, as it’s been doing for several years, you know the rise is enduring and superior. So even though gold has no yield or earnings to measure like the other markets do, it has true value.

The central banks are flooding the markets with their own currencies, and competitive devaluations will continue to grow. Many countries depend on exports for economic survival. This means the best price in the current deflationary environment wins, which is what a cheaper currency does.

This situation originally started with globalization and it’s bullish for gold. The U.S. is still in a delicate situation. It needs a weaker dollar to compete and stimulus measures must continue, which are both ultimately bullish for gold.

This is one important reason why we do not think gold or commodities are in a bubble. We believe they are rising within a mega trend that could last several more years, perhaps a decade. Some say that China is in a bubble and if they are, the demand for commodities will fall. China may be overheated but we don’t think it’s in a bubble. Their growth, even if it’s only a part of what they claim, is solid.

It was reported from NEW YORK that gold prices may have retested the $1,100 support zone after the Fed’s surprise discount rate hike announcement, but the market has stabilized and Kitco Metals analyst Jon Nadler says there are more pressing issues on the plate right now.

Although Nadler agrees that Thursday’s announcement was “psychologically beneficial for the dollar, but not so hot for gold,” he maintains that the impact has been small so far.

“By this morning the realization that the discount rate is not the Fed funds rate started to sink in among speculators,” Nadler explained. He adds that “it was a surprise announcement, but one shouldn’t read too much into it… The hike only affects $14 billion worth of borrowing.”

At the moment, Nadler, like many gold observers, is more focused on the IMF’s (International Monetary Fund) decision to sell 191.3 tonnes of gold from a previously planned sale of 403 tonnes of gold.

That move could indeed hurt gold prices. “This is a more critical situation because the market is already in surplus supply mode,” Nadler explains.

Nadler notes that he isn’t completely ignoring the Fed discount rate hike announcement, given that it forecasts a possibly more qualitatively important Fed funds hike between August and October. This signals that the dollar could rise against the Euro, putting pressure on gold prices.

On a long-term basis, Jon Nadler  is looking at lower gold prices as he sees continued dollar strength – as well as the Fed shift towards an exit strategy whereby it is less accommodative and more inclined to mop up excess liquidity. Still, Nadler argues that no downward spiral in gold prices is on the horizon.

In January, Nadler projected a price range of $880 to $1,280 an ounce for the next six months, taking volatility into account. It sees a price range of $970 to $1,170 in the short-term.

Nadler continues to encourage his investors to hold a 5% to 10% core allocation in gold, even if prices edge lower. “There’s no reason to shift out of that,” he said.

Gold futures for April delivery was falling $2.8 to $1,115.90 an ounce at the Comex division of the New York Mercantile Exchange Friday.

It’s hard to believe so when some of the smartest and wealthiest financial investors keep buying it. Gold being a tangible asset not a paper one is considered to be valuable in times of declining paper assets.

Exchange traded funds offer a way for investors to purchase shares without taking delivery on gold bullion.  There is no need to worry about storage.  You could sell these shares at another time back to the market place. Another way to invest in gold is to purchase call option contracts.  These financial instruments offer a tremendous amount of leverage with a limited risk.  Using the leverage is a way to maximize your returns.  Just like ETFS, there is no obligation to take delivery.  Acquiring a financial option specialist can help you trade gold option contracts.  HB Group can be very helpful with their experience and knowledge with these financial instruments.  You could visit them at www.hbgroupintl.com

Multibillion dollar investments are being made in gold today.  Only one could think that the prices are still relatively low.  Most investment portfolios do not have Gold in them.  With today’s investment gold rush, a shift of portfolio funds may cause prices to jump to $1300.

It was reported from MUMBAI Commodity Online that after tasting success with its campaign to sell gold coins across India’s post offices, the World Gold Council (WGC) is getting ready to launch a new version of gold traded on paper in India. The new form of paper gold, just like the Gold ETFs, will be launched in the Indian market in the next few months.

According to WGC India Managing Director Ajay Mitra, India offers tremendous potential not just in the sale of physical gold, but all forms of gold transaction methods. While India has six Gold ETFs successfully running and attracting good investments, WGC is talking to a number of players to launch a new version of gold traded on paper.

India is one of largest consumers and importers of the yellow metal in the world. While most Indians prefer buying gold jewellery and gold coins as investment, a large number of investors are now scouting for investment-led gold instruments like ETFs.

“We hope to launch newer paper gold – gold traded on paper in India by June this year in India. The paper gold will be stored by a custodian, whoever is channelising that venture,” Mitra said.

He said India Post, the post services department of the Indian government could be an ideal partner for the distribution of the new Gold ETFs. India Post has partnered WGC in promoting and selling gold coins across hundreds of post offices in the country.

The WGC official said that the apex gold body has decided to launch the new paper gold in India as consumers have been saying that storing physical gold at their homes is becoming very inconvenient.

The paper gold instrument will help investors and customers in getting rid of storing their precious gold. India Post officials said as per the new initiative, a customer can buy paper gold from any of their branches and keep it as safe investment.

Bullion experts believe the new paper gold idea from WGC will drive up gold investment demand in India.

“It is going to be a wonderful idea, if a new form of paper gold can be launched in association with WGC in India. I am sure thousands of people will just buy paper gold from post offices instead of physical gold from jewellery shops as investment. This will push up gold demand in India,” Kiram Mehta, a bullion analyst in Mumbai told Commodity Online.

Mehta said different types of paper gold instruments can be launched in India in tie ups with broking houses, institutions and banks. “This is a really big opportunity that can catch up the investor appetite for gold in India,” he added.

Across the world, paper claims to physical gold have so proliferated during the past two decades.

It was analysted that expect platinum and palladium, used in catalytic converters, to rise further, after gaining 14 percent and 28 percent respectively since late December, but also warn of a correction on concerns over the still ailing auto sector.

The platinum group metals (PGM) rise and the dollar’s dip against a basket of currencies lifted gold, but analysts said fresh impetus was needed to push bullion higher as there was little support from currency markets with the euro under pressure.

Spot platinum rose as high as $1,626.00 per ounce, its highest since August 2008, and was at $1,612 an ounce by 2:52 p.m. EST, up about 1 percent on the day.

Spot palladium rose as high as $459 an ounce, its highest since early July 2008, and stood at $457.50 in late trading, up about 1.1 percent from Friday.

“We saw the opening of the U.S. ETFs this month, that’s proved relatively popular so far. We’ve seen a little bit of switching from gold to PGMs overall, so that’s driven the price,” said Commerzbank trader Rory McVeigh.

A U.S. subsidiary of London’s ETF Securities launched the products last Friday, and uptake has been healthy. About 170,000 ounces of metals were added to the products in the first two trading sessions.

But McVeigh said the lack of a solid recovery in the car industry could mean once the investment demand is saturated, both metals could be heading for a sharp correction.

“When it’s investment driven, the exit could be a lot harsher than the rise,” he said, but he did not rule out a rise to $1,800 an ounce for platinum in the short term.

Gold prices were up slightly but rises were limited as the euro remained under pressure due to financial problems in Greece and concerns over the potential impact on the single currency.

Investors have also kept to the sidelines because New York markets were closed on Monday for Martin Luther King Jr. Day.

Spot gold inched up to $1,132.50 per ounce compared with $1,129.90 an ounce late in New York on Friday. U.S. gold futures for February delivery were at $1,134 per ounce, up 0.25 percent.

“Until we get fresh momentum based on an event or data, gold is going to continue to struggle as long as the dollar is being preferred versus the euro,” said Tom Kendall, precious metals strategist at Mitsubishi.

Spot gold hit a five-week high of $1,161.50 on January 11. Gold has fallen 2.5 percent since then, as a rise in the greenback hurt investor sentiment.

The high gold price has hurt Italian jewellers, who are now turning to alternative materials such as leather, textiles and ceramics to offset prices, an industry executive at the Vicenza trade fair said.

Holdings by the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.914 tonnes to 1,112.836 tonnes on Jan 15.

Silver prices were at $18.61 an ounce versus $18.36 an ounce late in New York on Friday.