Gold Prices Get Lift from Greece Bailout
Source: TheStreet, Alix Steel (3/26/10)
". . .analysts expect the euro to continue to come under long-term pressure."
Gold for April delivery was adding $4.60 to $1,097.50 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,099.80 and as low as $1,088.50. The U.S. Dollar Index was slipping 0.44% to $81.80. Gold's spot price was adding over $5, according to Kitco's gold index.
Investors bought gold after finally getting a long-awaited resolution to Greek sovereign debt. The bailout will consist of a combination of IMF and European Union aid. The IMF will come through with a "substantial" contribution, but the EU requires unanimous agreement from the 16 eurozone countries and can only be used as a last resort, if Greece loses access to all credit markets. The fact that the eurozone could manage its own debt problems but not be entirely responsible for the 45 billion euro debt price tag supported the euro, weighed on the U.S. dollar and boosted gold. Reportedly, the EU will provide two-thirds of the bailout while the IMF will deliver the remaining funds with specific numbers still being discussed.
Celebration may be short lived. Portugal's debt crisis still looms, and many analysts expect the euro to continue to come under long-term pressure. Gold prices are staying in a tight trading range for now with bargain-hunting ramping up around $1,090 an ounce. The popular physically backed ETF SPDR Gold Shares (GLD) added 4.57 tons Thursday as investors rotated into the alternative asset.