Loading ...
Sorry, an error occurred while loading the content.

Gold Price Set to Challenge All-Time High

Expand Messages
  • Roger Bagula
    http://www.goldalert.com/stories/Gold-Price-Set-to-Challenge-AllTime-High Gold Price Set to Challenge All-Time High April 30th, 2010 - 9:15 am | by GoldAlert
    Message 1 of 1 , May 1, 2010
    • 0 Attachment
      http://www.goldalert.com/stories/Gold-Price-Set-to-Challenge-AllTime-High

      Gold Price Set to Challenge All-Time High
      April 30th, 2010 - 9:15 am | by GoldAlert
      Gold Prices

      GOLD PRICE NEWS - The gold price broke out to new 2010 highs Friday morning, breaking above$1,175 per ounce and trading within 4% of the price of gold’s all-time record high of $1,226.50. The euro rose against the U.S. dollar on speculation that the joint European Union-International Monetary Fund rescue package for debt-plagued Greece is set to be implemented as early as this weekend.

      Joining the rising gold price were both oil and copper, which advanced on renewed risk appetites. Stock markets in Europe rose as yields on Greek government debt eased and the cost of insuring the nation’s debt declined as well.

      The gold price, which traded as low as $1,045 in early February has been in a steady uptrend as fears of a Greek default have escalated. Sovereign debt concerns have driven investors to gold bullion and to investments tied to the price of gold. Ratings downgrades have increased of late, with S&P slashing its credit rating of not only Greece, but also Spain and Portugal. Worries over how these nations will deal with their rising deficits and debt loads has led investors to contemplate a global currency crisis. This has driven flows into gold, which has slowly begun to reassert itself as a monetary alternative.

      How high gold eventually goes, whether it ultimately hits $1,500, $2,000, or $5,000, is pure speculation. However, it stands to reason that until nations across the globe reign in deficit spending, which over the long run leads to bankruptcy, the gold price will have a strong tailwind.

      European leaders, notably fiscally-conservative Germany, have struggled with how to bail out Greece in a manner that prevents the creation of a moral hazard that fails to punish nations that fall outside the boundaries of the financial terms laid out in the Maastricht Treaty. Worries that a dangerous precedent is being set with the Greek bailout has driven euro selling and led to greater fund flows in gold.

      Higher gold prices have boosted the profit margins of gold producers. Over the last few weeks, the underperformance of the share prices of gold mining producers versus the price of gold has begun to wane. The Market Vectors Gold Miners ETF (GDX) has risen 13.3% thus far in April versus a 5.5% gain in the gold price. Strong earnings reports from Newmont Mining (NEM) and Barrick Gold (ABX) helped to push the GDX higher by 4.4% this week alone.

      Next week, a number of earnings reports from gold mining companies will be released as Yamana Gold (May 3), Kinross Gold (May 4), Randgold (May 6), and IAMGOLD (May 7) are all set to report of their first quarter financial performance.
    Your message has been successfully submitted and would be delivered to recipients shortly.