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Gold Fix Brings Class Action Lawsuit Against Banks
Posted March 6th, 2014
Los Angeles CA, Mar 6 (Tangible Investments) - by James O’Dell - The gold price rose on Wednesday, with Gold gaining $2.60 or 0.19 percent to close at $1,336.34 an ounce, after fewer than expected new private jobs were added in February, The price of Silver inched up $0.02 or 0.01 percent to close at $21.16 an ounce. A group of analysts at Nomura Securities have turned bullish on gold, and they claim that the factors which triggered the yellow metal's 28 percent slide last year are fading.
The analysts say that ETF's and hedge funds are no longer selling their (paper) gold, while gold producers are putting new projects on hold as prices dip, and real interest rates have steadied. Following last year's slide "many of the variables that drive gold prices have already reset to an extent," wrote the analysts. "ETF and Comex positioning no longer appear to pose the same threat to prices as in 2013. Gold producers have delayed the next phase of growth projects as they work to protect balance sheets."
In the meantime, tensions continue to build between Russia and the U.S. over the incursion into Ukraine and should support gold as a safe-haven asset in the shorter term. "In the next few days, the situation in Ukraine will continue to be uncertain and will keep the markets nervous. Because of that, I expect an upside potential in the short term for gold prices," said Alexis Garatti, of Haitong International Research.
Meanwhile, a New York resident has filed a class action lawsuit against Barclays Plc, Deutsche Bank AG and three other banks for allegedly manipulating the London gold fix. The complaint cites a Bloomberg News story that appeared last week about a draft paper by researchers that revealed an unusual pricing pattern connected to the benchmark. It's the first study to raise the possibility that the banks, which include the Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA, may have acted together to manipulate the gold fix.
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