Gold steady on mounting Italy debt worry

Gold prices hovered above $1,790 on Tuesday, after soaring more than 2 percent in the previous session, supported by safe haven demand as Italy took center stage in the euro zone debt crisis. Italian government bond yields soared to near 15-year highs, putting the euro zone's third largest economy front and center of the region's debt crisis, despite efforts by policymakers scrambling to stem growing contagion. "Gold will continue to trend higher due to the euro zone situation and should have no problem rising above $1,800 in the short term," said Hou Xinqiang, an analyst at Jinrui Futures. "For the moment the market is worried there is still further liquidation to come, but we believe that is going to come to an end," said Michael Jansen, commodities analyst with JPMorgan. "There has been a very observable transfer of gold ounces in terms of investment capital from hedge funds, wholesale funds, bullion banks, toward the retail community, and that has put a floor in the price."

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