Thursday, April 22, 2010

Greek Debt Pushes Gold Prices Down

The continuing debacle in Greece has investors on edge, and that has pushed the price of gold down again, as the euro continues to drop while the U.S. dollar rose today.

At one point gold for June delivery had fallen by $13.50 to $1,135.30, although gold prices have rebounded some from that, and have traded from $1,133.10 to $1,149.80 throughout the day.

News that the budget deficit of Greece is probably worse that thought, and they are probably moving toward being bailed out has caused concern, but the ongoing uncertainty from the European Union and the IMF underscores there is probably extraordinary fighting behind the scenes as other nations like Portugal seem poised to pounce on bailout money if Greece gets rewarded for their terrible financial practices.

For investors, it's the uncertainty that continues to surround the Greece debt crisis, and even when it seems things have been settled, there continues to be mixed signals from the EU and IMF.

Adding to that the threat of Ireland, Italy and Spain, and you have an extraordinary set of economic circumstances which aren't going away, no matter what the outcome of the Greece fiasco is.

The good news for gold investors is gold continues to be strong no matter what the U.S. dollar does, implying the decoupling is real, although that will fluctuate back and forth for some time.

But it seems to say there is support under gold which even the worst of potential circumstances isn't able to break through, and that's good news for those holding gold.

There was also reports from the U.S. Labor Department today that inflation rose by 0.7 percent in March, with food prices surging the most for a month since 1984. Energy prices also rose, signaling inflation is growing, and that's something investors need to consider strongly in their gold strategies.

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