Gold Prices Look Toward New Highs


"Gold prices were popping Friday. . ."

Gold prices were popping Friday on technical trading and signs that the U.S. economy is slowing, which prompted another flight to safety into gold.

Gold for August delivery was adding $9.90 to $1,255.80/oz. on the Comex. The gold price today has traded as high as $1,258 and as low as $1,241.60. The U.S. Dollar Index was rising 0.04% to $85.79 while the euro slipped 0.25% to $1.23 against the USD. Friday's Spot gold was popping more than $10, according to Kitco's gold index.

Gold prices were making a run to conquer their previous record of $1,264/oz., and technical trading and safe haven buying were helping them do it.

Part of gold's move Friday was short covering and book squaring, which ramped up as Q210 came to a close. Also, headed into summer weekends, investors are opting to put their money into cash and gold to protect against negative headline news.

Gold also rallied on relief that the markets finally have specifics on the financial regulation bill. A final bill is expected to be approved by Congress next week and President Obama before July 4th. The big news for gold bugs was the fact that investment banks don't have to leave the gold business and can still use 3% of their funds to trade the market. They can also use credit default swaps in "safe" assets like gold to hedge risk.

The final factor moving gold prices was risk aversion. The U.S.' Q110 GDP number was revised down a third time to 2.7%, indicating the U.S. economy was growing much slower than expected.

"Bullion was higher on short covering and technicals," says Kitco's Jon Nadler, "but participants were likely eyeing the GDP data with an expectation that risk appetite would suffer. . .and safe-haven plays were shaping up as the play of the day."

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