Gold Prices Rocket Up, then Dip Slightly
January 19, 2009 by Martha Rooks
Yup, it was a tough week for the American dollar. More businesses failed. More mortgages foreclosed. More people lost their jobs. Consumer optimism is low. The dollar sank.
But gold prices are booming again. Gold rose to its highest in a week overseas this (Monday) morning, riding on a recovery in stock markets and a weaker U.S. dollar against the euro before profit taking erased some of the gains.
Gold has bounced around 4 percent since tumbling to a one-month low last Thursday. That was brought on by softer equities forcing investors to cash in to cover losses. The precious metal rose as high as $845.55 an ounce, its highest level since Jan. 12, before slipping to $837.60 an ounce by 0024 GMT, down $4.25 from New York’s notional close as oil prices reversed course and slipped.
“The intact popularity of the metal with investors should be adequate to help stabilize the price at or at least just under the $800 mark,” precious metals group Heraeus said in a report, referring to a level last seen in November.
Dealers said record bullion holdings in SPDR Gold Shares boosted sentiment. Gold holdings in the world’s largest gold exchange-traded fund jumped again last week.
It continues to be a dodgy market to invest in. Fortunes are being made and lost every day. Reputations are being made and lost as well. The market will, no doubt recover but in the meantime, gold continues to be an investor’s friend.
And one comment about the prices related to this week’s inauguration of the new U.S. President Barack Obama. Some say the gold prices may have lurched upward too fast.
“So that’s why we see some profit taking. I would say people are squaring off positions before Obama is sworn in,” said a dealer in Hong Kong. “I mean there’s still a possibility the dollar may get stronger again.”
But the possibility that gold prices will drop as fast and as far as they’ve come doesn’t seem likely, with no one predicting the economy will turn around fast. It’s a good time to invest if you can in order to try to hang on to your wealth.
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