Gold Prices Rising
May 26, 2010 - Gold selling to cover losses of assets in other markets kept the yellow metal at a low level until last Thursday. Spot gold was $1,177.00 an ounce climbing back up to $1,212.50 a $35.50 (3%) by Wednesday.
Last week, gold began a profit taking stage that was until Thursday when the markets plummeted on renewed Euro crisis concerns. Just two weeks ago gold market staged an exciting two-day run which climaxed Wednesday 19th on a record breaking performance of $1243.10 an ounce to erase the previous all-time record of $1226.40 posted on December 3, 2009. The difference was $16.70 (1.36%).
Gold staged the record-breaking run amid growing doubts and uncertainties about the effectiveness of the 750 billion euro bailout fund approved this month for troubled EU member countries threatened with fiscal difficulties.
Today we know the bail out package proved to be a band-aid to what appears to be a ‘Lehman-Style’ tsunami heading towards the European markets. Now that Spain has been added to the crisis, investors are wondering who is next.
These doubts and uncertainties had contributed to the decline in markets around the world. Since Thursday last week, gold has gained $35.50 an ounce, yet another sign of investors moving their assets to a safe-haven.
Frank McGhee of Integrated Brokerage Services opined that “we are in the first round of an across the board asset devaluation. Gold will tend to maintain its value now. It will periodically sell off as other markets drop, but you will see money coming back into gold later.”
Gold’s status as a safe haven for investments in times of economic difficulties has been demonstrated countless times. The most memorable of these instances happened in the decades of the 1970s and the 2000s.
During the inflation of inflation of the 1970s, gold prices skyrocketed 1,500%. Prices started in 1970 at $37 an ounce and finished at $600 an ounce in 1979. During the inflation of 2000s, gold soared 400%. It started at $272 in 2000 and finished at $1100 in 2009.
Financial turmoil in the euro-zone continues to favor gold as a safe haven.
“Problems in the euro area should continue to provide some support (for gold). The debt problems are not going away overnight,” said Walter de Wet of Standard Bank. “Gold will continue to have this increased safe-haven status.”
Stewart Lawson
Senior Staff Writer - Gold-Coin.com
