Gold Prices Up but Dollar Tempers Gains
Source: The Street, Alix Steel (12/20/10)
"Gold prices were trying to climb higher Monday as investors bought the metal as a safe-haven asset."
Gold for February delivery was adding $4.20 to $1,383.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,388.90 and as low as $1,376.60.
The U.S. dollar index was up 0.25% to $80.57 while the euro slid 0.58% to $1.31 versus the dollar. The spot gold price was rising more than $8, according to Kitco's gold index.
Gold prices were shrugging off a stronger U.S. dollar as investors bought gold as protection against escalating tensions between North and South Korea.
South Korea went ahead with military exercises off the coast of Yeonpyeong, despite the fact that North Korea threatened retaliation, echoing its attack on the island in November which killed four people.
Investors were buying gold as protection against any potential conflict as a safe place to preserve their wealth. Gold was also benefiting from uncertainty in Europe. Although European Union leaders agreed to a permanent crisis-lending facility starting in 2013, there was no immediate aggressive action announced out of the EU summit last week.
Gold's gains were tempered by a stronger U.S. dollar, which was gaining on euro weakness. Also, an explosive outcome to South Korea's military testing never happened. North Korea changed its tune, for now, and said it would not respond to fire testing from its neighbor. But investors were reluctant to completely dump gold and were tentatively buying as an insurance policy.
January could see a flurry of activity as traders buy back some of their gold positions.
Gold mining stocks, a risky but profitable way to buy gold, were higher Monday.