, Inc4 February 2010 – Gold prices dipped below $1,100 per ounce today, giving back over $12 per ounce of gains on the continued strength of the US dollar and in anticipation of better than expected job numbers. After going over $1,115 per ounce early on Wednesday, a fall began that afternoon that lasted throughout much of Thursday as fear motivated investors to react negatively.
The dollar’s resurgence resumed on Wednesday amid reports that first Greece, and then Portugal are struggling with severe debt issues, weakening the value of the euro and sending the dollar to a .319 gain on the US Dollar Index. The prevailing opinion is that this strength could last for a little while longer as all eyes turn to Portugal and its difficulties.
The non-farm payroll data and speculation over bank interest rates are affecting gold prices as well. The payroll data, expected to be announced on Friday, is believed to be better than anticipated, and the Federal Reserve has been hinting at tightening the money supply with interest rates to avert a threat of inflation.
While such news generates fear among some smaller investors, larger traders are not so easily moved. SPDR Gold Trust, a large exchange-trade fund, continues to be steady with its gold holdings, maintaining over 1 million tons of physical gold at a value of over $1 billion, in spite of members in the fund who have sold their holdings recently, creating outflow. This position suggests that gold prices are expected by many to remain strong.
While gold prices drop over concern about jobs data, interest rates and fiscal problems abroad, many serious investors are seeing this as a chance to pick up additional holdings at lower prices, using the news to their advantage. Private investors should look to do the same, as the see the ongoing financial problems in the US and anticipate a new rally in gold prices.
Ronald Stevens
Senior Staff Writer - GoldPrice.net
