, IncGold Prices Firm as US Stocks Drop
June 4, 2010 - Gold prices remain steady as US stocks drop this morning on the combined effects of weaker than expected employment data and fresh rumors of continued troubles in Europe’s credit markets. Confidence in the economic recovery is seen as waning as fewer US workers were hired in May than expected.
“Hiring looks soft,” remarked chief US economist at JP Morgan Chase & Co., Michael Feroli. “It does raise some red flags that businesses are still pretty cautious.” Federal Reserve Chairman Ben S. Bernanke stated joblessness is among the “important concerns” for the hesitant economic recovery.
On the heels of the worst economic slump since the Great Depression, the flailing US recovery is seen as bullish news for the overall upward trend in gold prices. Holdings in the SPDR Gold Trust, the largest bullion backed Exchange Traded Fund, rose to a record 1.289.84 tons yesterday, said the company’s website.
In response to worsening fears over the credit and bank crisis in Europe, Afshin Nabavi, senior vice president at MKS Finance SA in Geneva said, “Gold at $1,300 an ounce could be a possibility this year if there’s no [positive] change in the economic situation.”
The combined forces of a slower than expected US recovery and deepening trouble in Europe are widely considered to be contributing factors to the bull market in gold. Short term, the four-day work week saw little change in the spot gold price following the prior week’s rally of over $30. For year-to-date, gold has seen a rally of just over $100 per ounce--from a January 3rd close of $1,101 to today’s value of approximately $1,204.
Stewart Lawson
Senior Staff Writer - GoldPrice.net
