, IncFebruary 10, 2010 – Gold prices have been pulling back today, apparently reacting to news that a purported bailout in Greece’s sovereign debt crisis has not materialized. This news, and Federal Reserve Chairman Ben Bernanke’s proposed strategy for managing the US economic crisis have pushed the US Dollar Index higher and gold prices lower in today’s trading.
The London Telegraph has reported that, “Germany is preparing to drop its vehement opposition to a rescue package for Greece, fearing that a rapid escalation of the debt crisis in Southern Europe could endanger German banks and damage the euro.” While this creates a potential solution, the lack of a definitive agreement has helped to push the US dollar back up, with the US Dollar Index currently at 79.96, or up 0.26 from yesterday. At 12:45 PM EST, gold was trading at $1,073.60, down $5.00 from yesterday’s close.
Mixed economic news from the US has come out today, with details of Fed Chairman Bernanke’s testimony before the House and US trade deficit numbers finding their way into the headlines. Bernanke reaffirmed his concern about inflation by ensuring the House that the Fed has a plan in place to fight it, suggesting increased interest rates and reduced money supply as steps that the Fed would utilize to combat further declines in the dollar. News of the trade deficit climbing from $36.4 billion to $40.2 billion in January also came out today, further impacting efforts to strengthen the economy.
While the lack of a Greek bailout seemed to have the biggest initial impact on lower gold prices, Bernanke’s confirmation of inflation concerns and the growing trade deficit may end up driving gold prices higher. Investors who are liquid should make purchases as traders consider all of the day’s news and make decisions that could further affect gold prices.
Stewart Lawson
Senior Staff Writer - GoldPrice.net
