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Homemetal commoditiesGold’s ‘safety’ bid may be capped around $1,300

Gold’s ‘safety’ bid may be capped around $1,300

Benchmark gold prices may post fresh two-month highs this week, possibly breaking $1,280 an ounce, if a slump in emerging markets continues to spark a flight into the relative safety of bullion, a CNBC survey shows.

CNBC's latest survey of market sentiment showed two-thirds of respondents (12 out of 18) expect prices to gain this week, 22 percent (4 out of 18) forecast prices will fall while 11 percent (2 out of 18) expect prices will trade at current levels.

(Read more: Gold benefits amid turmoil in China, emerging markets)

A $10 billion a month cutback in the Federal Reserve's bond-buying program "though modest, has created currency crises in emerging markets," said Scott Carter, CEO of Lear Capital. "Gold is still viewed as a safe haven when currencies are being devalued and has increased due to currency volatility."

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Carter added that softer U.S. equity markets hit by weak corporate earnings has caused a spike in the VIX – an estimate of implied volatility of S&P 500 options commonly known as the 'fear gauge' – helping to lift gold further. "When fear enters the market, gold is an asset of choice to hedge against it."

Gold completed its fifth straight week of gains last Friday and though many believe the rally is set to continue, it may struggle to get beyond $1,300, poll respondents said.

Trend Change?

(Read more: The Fed is trapped; buy gold now, Peter Schiff says)

Many strategists said the move higher doesn't yet signal a significant reversal of the down trend following bullion's 28 percent decline last year, which ended a 12-year bull run.

"There's lots of resistance in the $1,280-1,350 area, but a bounce to $1,400-1,500 is not out of the question," said Yoni Jacobs, Executive Director and Chief Investment Strategist at Chart Prophet Capital, an equity investment fund. "No trend change seen yet. Looks like further upside until signs of reversal."

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