FXpro

Gold continued to rise this morning amid heightened safe-haven demand, after eurozone debt troubles deepened.
 
Economic data released this week showed that the crisis has had an impact on manufacturing activity in the region, as well as China, spurring fears that global growth will slow even further. Eurozone manufacturing data for October revealed further contraction than previously reported. Greece's prime minister George Papandreou shocked markets on Tuesday after he called for a referendum on a €130 billion bailout package, igniting speculation that Greece will potentially leave the eurozone. The referendum is due to take place on 4 December, however ahead of this Mr Papandreou will face a confidence vote, which if he fails to pass will see his government dissolve.
 
The uncertainty over the fate of the eurozone, and potentially the EU, has deteriorated market sentiment and turned investors increasingly risk averse. Gold further extended gains yesterday after Federal Reserve policymakers said that significant downside risks remain in the US economy and refrained from taking any additional steps to ease monetary policy. Forecasts for the shiny yellow metal say that gold futures could jump to a record high of $1950 an ounce by the end of the first quarter in 2012, due to stagnating economic growth and the uncertainly over Europe’s debt crisis. Gold for December delivery has risen over 1% by midday today to a high of $1753.6 per ounce.