As gold overcomes 1200.00, where is the limit?

Gold had played out the expected scenario yesterday, as several reports pointed to a decline after vast gains and were accompanied by falling oil. Yesterday, oil hit lows of 1191.90 in New York, while electronic trading saw the yellow metal slump to a low of 1183.00. However, it closed at 1196.50 in London, as it climbed from 1188.25.

Today gold is once again on the rise, climbing 0.27% to 1205.90 at 2:40 GMT from New York's closing of 1202.70.

Major currencies lost grounds acquired as greenback recommenced its upward climbed. The dollar redeemed losses as the index surged to the current 84.47 from yesterday's 82.90. Oil declined from yesterday's high of 78.50 to 76.00 today, as it was unable to sustain yesterday's bullish movement.

Gold was under a bearish force yesterday caused by rising confidence in markets, as the EU finally came through for the single currency defending it with a stabilization loan package worth 750 billion euros; but today we see that investors are having doubts towards the package's efficiency in preventing a spread of the Greek crisis to other European countries, as the IMF suggested that Portugal and Spain cut spending in order to curb the Greek contagion. Fears are slowly trickling into the markets, where investors fear the European Central Bank will not be able to raise the interest rate by the end of the year due to the Greek crisis, which has caused the euro to slump once again today, especially as the ECB altered its stance and started buying government bonds adding further pressure on its balance sheets.

Nikkei fell by 1.14% while Hang Seng retreated 1.43% today, as we see Asian indices decline, with American and European stock futures indicating a possibility of the same scenario in those continents Investors were thus once more tempted to seek a safe haven in gold.

Other precious metals fell once more today, after climbing slightly yesterday, as silver is trading at 18.46 down from yesterday's New York closing at 18.50, platinum is trading at 1675.00 as it fell from yesterday's closing 1695.00. Investors are feeling anxiety as inflation in China climbed while house prices made a historic upward leap of 12.8% and bank lending is above estimates. This data suggest the Chinese government will tighten credit policy and raise interest rates once again to stave off inflation and asset bubbles formation.

Platinum and silver are expected to drop with this tightened credit policy, as they wouldn't be as lucrative during stalled economic recovery and growth. Gold on the other hand, being a safe haven against depreciating currencies, feeds on high inflation rates and is expected to climb even further.

S&P GSCI gained 11.35 points yesterday and closed at 514.82, as commodity indices rose. The same path was taken by stock indices. Today, commodity and stock markets are under negative pressure, turning investment to gold as an alternative.

Gold is expected to fluctuate heavily today, with occasional brusque corrective waves being caused by turbulent financial markets. The general trend is still upward, as gold may be shooting sky high, bolstered by inflation.