Gold Prices Break $1,200—Now What?
Source: The Street, Alix Steel (5/7/10)
"Gold finally broke through $1,200/oz. as the violent Greece riots spooked investors."
Gold for June delivery was up $2.50 to $1.200.80 an ounce at the Comex division of the New York Mercantile Exchange. Gold prices Friday have traded as high as $1,209.60 and as low as $1,193.20. The U.S. Dollar Index was slipping 0.05% to $84.85 while the euro was rallying off its one-year lows adding 0.15% to $1.26 against the dollar. The spot gold price was down over $6, as investors took profits and sold the physical metal for cash.
Gold prices finally broke through $1,200/oz. on Thursday as the violent Greece riots, which were televised, spooked investors. European Union nations were voting on their portions of the €110 billion bailout for the country with most people focusing on Germany, which is responsible for almost $29 billion. Thus far the German Upper House has approved the financial aid package. Worries still remain, however, that the Greece turmoil could infect other debt-laden EU countries like Spain and Portugal.
The European Central Bank kept interest rates unchanged at 1%, but did not take further steps to help Greece. Many analysts were hoping the ECB would buy Greece bonds in order to loan the country additional money. Although the euro is staging a mini-rally Friday, most analysts expect the currency to come under prolonged pressure as the debt situation worsens. Gold and the U.S. dollar will benefit from a weak euro as investors buy the typically safer forms of money. Gold prices were selling off slightly on Friday as investors took profits after prices popped 1.8% Thursday.