Gold Price Reaches for $1,400

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"Investors fled to gold as protection against a eurozone debt crisis."

Gold prices were closing in on $1,400 an ounce Wednesday as investors fled into the safe haven asset as protection against a eurozone debt crisis.

Gold for February delivery was adding $6.70 to $1,392.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,398.30 and as low as $1,383.

The U.S. dollar index was losing 0.87% to $80.58 while the euro stemmed losses and was rising 1.22% to $1.31 vs. the dollar. The spot gold price was up $2.20, according to Kitco's gold index.

Gold prices were setting their sights on $1,400 for the second time this year and reached new highs in euros as European sovereign debt fears heated up. Gold soared 1.3% Tuesday as the euro hit a 10-week low against the dollar as investors worried Belgium, Portugal, Spain and Italy might be the next countries to need a bailout.

"Default speculation will continue to dominate sentiment in the coming days," says James Moore, analyst at thebulliondesk.com. "Short-term, bullion. . .remains vulnerable to bouts of long liquidation. . .[but] Europe's debt problems. . .are supportive to further price gains." Investors will turn their sights on Europe again Thursday as the European Central Bank meets to discuss interest rates.

Gold was getting additional support Wednesday from a jump in risk appetite, which boosted the euro and hurt the dollar. The weaker dollar was helping gold's advance as the dollar-backed became less expensive to buy.

World-wide purchasing managers indices, which measure the health of the sector, came in higher than expected. China's November PMI rose to 55.2, France's rose to 57.9, Germany's fell slightly to 58.1, but any number over 50 indicates growth. Even eurozone PMI came in at 55.3 and the U.K's rose to 58.

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