Gold rises above $1,600 on safe haven appeal

LONDON: Gold rose above $1,600 an ounce in New York for the first time this month after an unprecedented levy on bank deposits in Cyprus increased demand for a protection of wealth.

"Gold looks poised to benefit from its safe-haven properties amid renewed risks coming out of the euro zone," Joni Teves, an analyst at UBS n London, wrote on Monday in a report. "As people start to worry about the safety of their deposits, gold would become an attractive alternative and an escalation of these worries would prompt a return of fear-related physical buying."

Gold futures for April delivery rose 0.6% to $1,602.60 an ounce by 7:52 a.m. on the Comex in New York. Prices reached $1,607.60, the highest since February 27, and added 1% last week. Futures trading volume was 39% above the average in the past 100 days for this time of day. Gold for immediate delivery gained 0.7% at $1,603.49 in London.

While gold had the first back-to-back weekly gain last week since January, holdings in exchange-traded products fell to 2,469.8 metric tonne on March 15, the lowest since September, data compiled by Bloomberg show. Prices are down 4.4% this year after 12 straight annual gains.

"The deposit levy plan in Cyprus may be the spark that gold needed to overcome its recent weakness," Mark O'Byrne, the executive director of Dublin-based GoldCore, a brokerage that sells and stores bullion coins and bars, said on Monday.