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Gold Prices Heading For Record Highs
Posted By admin On June 17, 2010 @ 12:24 pm In Featured Stories | Comments Disabled
Thursday, Jun 17th, 2010
Gold futures surged toward record highs Thursday as the stock market and the U.S. economy continued to flounder, leaving investors seeking a safe haven in hard assets.
Gold for August delivery rose $14.40, or 1.2%, to $1,245 an ounce on the Comex division of the New York Mercantile Exchange.
A weaker dollar was a contributing factor, with the ICE Futures U.S. Dollar Index down 0.4%, its lowest level in almost four weeks, and the euro up 0.6% against the dollar.
The jump also came in the wake of news that U.S. consumer prices posted their largest fall in nearly 1-1/2 years in May.
In addition the number of people filing for jobless benefits in the United States rose by 12,000 to 472,000 in the week ended June 12. Forecasters had predicted that claims would fall by 6,000.
The surge represents the largest daily rise in a week for gold, a rise within 1% of its all-time record high of $1,254 an ounce.
Despite the euro having somewhat rebounded recently, gold has held strong above $1,200, indicating a further detachment from movements in the currency markets.
Successful sales of Spanish bonds and the agreed publication of so-called bank “stress tests” in Europe have convinced traders that the euro has stabilized in the short-term. However, the ongoing sovereign debt crisis in Europe, brutal austerity measures, and rumours of an impending bailout for Spain, all indicate that gold will continue to thrive.
“As ever in the short term, anything could happen, but given the continuing degree of sovereign risk, gold is more likely to move higher than lower,” says Mark O’Byrne, executive director of GoldCore. “$1,300/oz remains possible over the summer despite the traditionally negative summer season.”
“It’s the age-old story, that however illogical it seems, gold is looking for any and every opportunity to go higher, and we all know the reasons why, the safe-haven factor, sovereign debt risks and so on,” said Peter Hillyard, head of metals sales at ANZ Investment Bank.
“The mood is with gold right now, the momentum is with gold and the market will either do nothing or go up,” he said.
“There’s background fear in these markets,” said Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “Other shoes are going to drop in Europe. You don’t want to hold dollars, euros and yen. Gold has great appeal as an alternative and safety asset.”
Gold has risen by up to 14 percent since the beginning of 2010, as investors continue to take it as an alternative to all paper currencies.
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