Gold Prices Shine on Global Worries
Source: TheStreet, Alix Steel (8/16/10)
"Gold prices were climbing Monday. . ."
Gold for December delivery was adding $7.80 to $1,224.40/oz. on the Comex. The gold price today has traded as high as $1,229.50 and as low as $1,216.20. The U.S. Dollar Index was slipping 0.63% to $82.40 while the euro was rallying 0.62% to $1.28 vs. the dollar. The spot gold price Monday was rising more than $7, according to Kitco's gold index.
Investors bought gold Monday on news that China surpassed Japan as the world's second largest economy after Japan's economy grew an annualized 0.4% in the second quarter vs. 5% in the first quarter. China is expected to grow this year at 10% with its nominal gross domestic product for the second quarter ramping up to $1.337 trillion.
The news only served to spook investors, however, and led them to dump risky stocks for the safety of gold. Many analysts are worried that China won't be able to sustain this explosive growth. Last week China's customs bureau said its trade surplus ballooned to an 18-month high as imports rose only 22.7%, well below expectations, as the country bought less. China has also taken steps in recent months to decrease the amount of money in circulation by requiring banks to hold more money in their reserves.
Gold prices have rallied 2% in August while the Dow Jones Industrial Average has fallen1.5%. Investors might be forced to take profits in gold to cover losses in stocks. But if gold is able to break through and hold the $1,230 level, then many investors could buy gold for fear of missing another big rally.
Silver prices were adding $0.29 to $18.40, while copper was up $0.03 to $3.28.