Gold prices soared today as investors sought out the metal's safe haven. Prices have traded as high as $1,130.20 and closed at $1,126.90 as the U.S. dollar index slipped 0.49%. Gold's spot price rose $18.10 according to Kitco's gold index.
Most investors bought gold as an alternative investment, seeking the safety of a hard asset over a pandemic of struggling currencies. Not only is the US dollar in trouble but the EU's multibillion-euro bailout for Greece is sketchy, and now Spain, US, UK, France and Germany are at risk for losing their triple-A credit rating from Moody's. Many analysts are anticipating further euro weakening and subsequent inflation.
Further currency debasement could help support higher gold prices, but global rate hikes might provide some short-term downside. After China's higher-than-expected inflation reading, analysts are expecting the government to raise interest rates to control economic expansion.
The Fed has pledged to keep interest rates low for an extended period of time despite fledgling economic recovery. But wary investors are ever vigilant, watching for any tell that the Fed will tighten rates sooner than expected. Gold has historically been the go to hedge against inflation bought by investors. Thus, any signs that the government will end the flow of free money will impact gold and other precious metal prices.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment