Gold extended earlier gains on Monday to hit its highest since late February, with some investors drawn to the precious metal’s safe haven properties as a radical bailout package for Cyprus shook sentiment in the euro zone.
Reuters report indicated that spot gold gained 1.2 percent to a fresh high since Feb 27 at $1,610.81 an ounce and was last seen at $1,603.46 at 1517 GMT, still up 0.7 percent.
The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but required the country’s savers to pay up to 10 percent on their deposits, shaking confidence in banks across the continent.
U.S. gold futures for April delivery also hit a 2-1/2-week high, at $1,610.40 an ounce. They last stood at $1,602, still up 0.6 percent. Societe Generale analyst Robin Bhar said the U.S. market openings gave a further push higher to gold.
“There is a bit of a flood into safe havens,” he said. “But whether that will last or not, it’s still early to say… all the evidence we have now suggests gold shouldn’t rally a lot further from here.”
Analysts remained cautious as the details of the bailout were still to be unveiled – euro zone finance ministers will hold a teleconference at 1830 GMT – while the market awaited a Cypriot parliament vote on the measure on Tuesday and worried that depositors elsewhere in the euro zone might face levies
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