Gold Regains Stability
July 14, 2009 by Martha Rooks
The price of gold, slipping and sliding through the economic slushiness we’ve had of late, appears to have stabilized as the week begins.
Gold, which had been falling as the dollar steadied on world markets, has now reversed itself. The price was holding steady as the dollar weakened against the euro and oil prices continued to recover after losses in the last several weeks. The precious metal climbed only cents on the day, from where it left off at $912.15 on Friday (with a dip earlier $908.20) to $912.60, but even that has been enough to reassure traders of the metal’s longterm value as a hedge against the weak and weaker dollar.
The week ahead has many traders holding their breath. On Tuesday, the gigantic American bank of Goldman Sachs is expected to announce its earnings report and many are breathlessly wondering if the huge Wall Street firm will announce bigger than expected profits.
In the previous quarter, Goldman Sachs announced profits of $1.6 Billion. Since many banks are suffering right now, Goldman Sachs has been a bright spot on the economy. The huge company has returned the stimulus cushion given to it by the U.S. government and some on the street are predicting that this quarters profits could go as high as $2 Billion. If that happens, it will certainly turn heads and be a market-maker, although the per share price of Goldman Sachs is already up 68%, so perhaps buyers will be wary of spending further on the already high price. (Although the price, which closed Friday at $141.87 is still well off its “bubble high” of $250.70, which was reached in 2007 before the onset of the recession.)
This may signal some life left in the economy, which has struggled now for more than a year. Some hope is always a good thing, but in the case of gold, it is a signal of a downward trend in prices that may benefit buyers. If the economy recovers, the dollar will strengthen, and the price of gold weaken. Good news for buyers, but as always, someone gains and someone loses. Those who bought high may be waiting a long time to sell again.
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