Good News for Gold Buyers: Prices Level Off
June 8, 2009 by Martha Rooks
There is good news and bad in gold prices this week. It all depends on your point of view and position in the gold market.
As we’ve discussed here several times, the price of gold is firmly tied to the strength of the U.S. dollar and what goes on in the American economy. When the economy is strong, the price of gold is, well, lackluster. When the American dollar is strong, the price can actually fall.
Hence in the last year or so, we’ve seen increases in gold prices that have surprised and delighted some people as they sold unwanted gold items and pieces that perhaps were out of style or for some other reason, no longer wanted or needed.
The per ounce price of gold was expected to top $1000 by sometime this coming Fall. But it hit that mark a couple of months ago. It seemed that investors were hungry for the stability provided by gold as the economy seemed to be rolling on waves that threatened to take us all under. The more the future seemed to shake, the more gold came out of safes, jewelry boxes, and anywhere else it had been hidden to re-enter the market.
The price of gold hovered there for awhile, but then it plateau’d. Investors seemed to be thinking things over. As we waited and held our breath wondering what effect, if any, the new U.S. President and the economic team under his administration would have on the financial futures of millions of people. What would they decide?
The polls show that President Barack Obama enjoys a personal approval rating of 67% and job approval at 61%, but that a majority of Americans do not approve of the way he handles federal spending. 51% disapprove. And at 48%, which is a statistical “even split” (because all polls have a margin of error at “plus or minus 3-6%”), half the country doesn’t like the way he’s handling the U.S. budget deficit.
But in spite of that, and maybe because he promised on Monday to create 600,000 new jobs over the next 100 days, the dollar is holding strong and the price of gold is wavering. Gold futures have now slid to a 2-week low, at $945.40 per ounce.
The economy is cyclical. Gold prices are cyclical. But overall, investments in the market as well as gold have grown in recent years. So… is gold going up good news for you?
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