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Post-Holiday Gold Rally for Safe Haven Asset

Following a week of thin trade before the holiday, investors returning to the gold
market and an unsolved fiscal cliff crisis gave a boost to the spot price of gold.

Gold has benefited as the best safe-haven asset since the economic crises
commenced in 2008, but in recent trade it has behaved more akin to a risk asset of
speculative benefit. The fiscal cliff in the United States is commonly given as the reason
for this regard, with uncertainty underpinning the gold market but also contributing to an
overall bearish drag on raw commodities.

The spot price of gold had fallen as much as 0.4 percent to $1,651.62 per troy
ounce and stabilized at $1,655.73 until a very early morning surge brought the precious
metal to a high of $1,669.00 per troy ounce.

While the U.S. budget crisis continues to have influence in markets and the
President has abbreviated his vacation to return to Washington, signals from overseas
place a far different light on the state of the economy.

Barnabas Gan, an economist with Oversea-Chinese Banking Corp., said the
strongest rationale for gold demand is the deepening of negative real interest rates in
the coming year. He added that bar and coin investment demand in Asia has increased
substantially with jewelry demand in India and China expected to grow in 2013.

Huang Guobo, who oversees management of the $3.3 trillion foreign-exchange
reserves in China, the largest foreign lender to the U.S. government, said the U.S. may be
a bright spot for the global economy in 2013.

Overseas demand has been lacking in previous months, partially in response to an
exceptionally strong U.S. dollar. A strong greenback causes gold to be more expensive
for holders of foreign currency, dampening demand.

Afshin Nabavi, a senior vice president at bullion refiner MKS Finance in Geneva,
said the dollar is weakening and also we are seeing good physical demand from China as
well as India.

The negative real interest rates have been exacerbated by some extent to the fiscal
stimulus of central banks. The gold market’s loss of 2.3 percent last week was partially
attributed to the release of optimistic economic data that indicated consumer spending,
durable-goods orders, and industrial output increased in November, stirring concern over
the breadth of stimulus from the Federal Reserve.

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