Economic Concerns And Certified Gold Posted by James Randolph on February 11, 2010
February 11, 2010 – Mixed economic concerns worldwide could result in more certified gold purchases as investors lose confidence in currencies such as the US dollar and the euro. News from China, Greece and the United States is largely favorable to gold investment and could be the impetus to starting the anticipated rally in prices of certified gold.
Gold spot prices closed at $1,071.70 yesterday after profit taking pushed prices down early, only to see them climb during the day. The news played a factor in the early drop as well, as failure by the EU to reach an agreement on the Greek sovereign debt crisis left many waiting for good reports. "Obviously the anticipation is that we’re going to get some good news as far as support for Greece is concerned," said Darren Heathcote, head of trading at Investec Australia in Sydney. “If we get a good result from the European Council, then you can expect that gold is going to go higher. We’ll certainly be targeting $1,100 again. Once the dust settles, gold will be higher," said Heathcote.
Developments in banking policies from both China and the United States continue to play a role as well. China has already instructed several banks to begin tightening their lending practices, a move that is seen by many as an unspoken concern about impending inflation. Inflation was the topic in the US as well, when the Fed released a written transcript of testimony by Federal Reserve Chairman Ben Bernanke before the House. His comments supported earlier concerns about possible US inflation in the wake of tremendous government spending and low interest money to invigorate the economy. Bernanke’s calls to possibly end stimulus money and raise interest rates have been especially interesting for those who see a weak dollar.
A weak dollar signals increased appeal for many people in certified gold as an alternative investment. Continued confidence in gold generally creates more activity in the market and can lead to higher prices. Investors who see the continued economic concerns may want to consider taking positions in certified gold in advance of possible price increases.
Senior Staff Writer – Certified Gold Exchange