http://www.thestreet.com/story/10833172/1/investors-waffle-on-gold.htmlLOL and just yesterday they said how the dollar was improving and gold was falling
Investors Pile Into Gold
By Alix Steel 08/11/10 - 09:02 AM EDT
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Stock quotes in this article: ABX , GLD , NEM , GOLD , GG
NEW YORK (TheStreet ) -- Gold prices were rallying Wednesday as investors digested the Federal Reserve's downgrade of the U.S. economy and its decision to buy U.S. bonds.
* More on Metals and Mining
* Early Glance: Silver Companies
* Early Glance: Gold Companies
* Two Silver Stocks to Watch for Cash Costs
* Market Activity
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Barrick Gold Corporation| ABX
DOWN
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Randgold Resources Ltd.| GOLD
DOWN
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SPDR Gold| GLD
UP
Gold for December delivery was adding $9.20 to $1,207.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,209.10 and as low as $1,197.30. The U.S. dollar index was rebounding 0.97% to $81.67 while the euro was sinking 1.33% to $1.30 vs. the dollar. The spot gold price Wednesday was rallying $3, according to Kitco's gold index.
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www.kitco.comGold prices were popping Wednesday as investors bought gold as a safety net against risky stocks and a struggling U.S. economy. Big gains in gold, however, were tempered by the relief rally in the U.S. dollar, which had initially sold off on the news that the Federal Reserve would start buying U.S. debt.
In its most recent FOMC meeting, the Fed left key interest rates at 0% to 0.25%, which was expected, but it downgraded the economy, saying "the pace of economic recovery is likely to be more modest in the near term than had been anticipated."
The most significant part of the statement, however, was the news that the Fed would use money made from mortgage-backed securities to buy long-term Treasuries. The size of the Fed's balance sheet will stay the same, so no extra money printing for now, but it does open the door for more quantitative easing in the future.
Although investors rushed into gold as inflation fears spiked, many analysts expect investors to stay trapped between their need for cash and their desire for the safe haven.
Short term, another popular safe haven is U.S. Treasuries. The yield on the 10-year bond sank to a 16-month low of 2.78% as investors lent money more readily to the U.S. But if the U.S. dollar weakens, gold will become more appealing as the metal will become cheaper to buy in other currencies, and investors look to the metal as money that retains more value over paper currencies.
Most analysts expect trading volume to stay thin. The gold ETF SPDR Gold Shares(GLD) has held 1,282 tons consistently since Aug. 5 as investors passively hold gold.
"I think we'll generally hang around the $1,200 level for a bit and then we'll advance higher .... in the fall," said Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund.
Gold will be looking for growing jewelry demand from China and India, as festivals seasons in these countries begin, for prices to retest their $1,264 intraday high. "We are hearing that physical gold demand is picking up [in India], obviously that will put the wind at our back with respect to the gold price."
* More on Metals and Mining
* Early Glance: Silver Companies
* Early Glance: Gold Companies
* Two Silver Stocks to Watch for Cash Costs
* Market Activity
*
Barrick Gold Corporation| ABX
DOWN
*
Randgold Resources Ltd.| GOLD
DOWN
*
SPDR Gold| GLD
DOWN
Silver prices were up 5 cents to $18.21 while copper was down 3 cents to $3.27. Investors continued to worry about import demand from China and stagnating growth in the country, which was underscored by China's disappointing producer price index report for July.
Topic: Investors Pile Into Gold as fed officially aknowledges our economys in trouble (Read 641 times)