LONDON (MarketWatch) -- Gold futures rose Tuesday after a three-day break, with the yellow metal benefiting from safe-haven flows as worries over Chinese growth and euro-zone stability lingered.
Gold futures traded $8 an ounce higher to $1,223.00.
Most other metals futures dropped, however, after Chinese manufacturing data showed a slowing expansion. See related story on China.
China's fast growing economy is the engine for metals demand.
But as fears for euro-zone stability mounted following the move by Fitch on Friday to downgrade Spain, and as the European Central Bank warned late Monday of mounting write-downs to come for euro-zone lenders, the euro hit a 4-year low. See story on euro hitting a 4-year low
Gold could reach $1,400 an ounce in the next 12 months, Credit Suisse strategists said Tuesday in a view that conflicts with other analysts of the same bank.
Among the reasons cited: gold tends to do well when the real Fed funds rate is below 2%; the 80% possibility of a macro environment supportive for gold; a low proportion of Chinese and Japanese foreign-exchange reserves in gold; the shortage of a reserve currency; low aggregate weightings of gold; and the real (inflation-adjusted) gold price is 34% off its all-time high.
By 2015, the cost of producing gold will be $1,400, the strategists said. They advised buying "cheap" gold stocks, citing Newmont Mining (NEM 54.40, +0.58, +1.08%) .
