Gold hits record again, extends winning streak
Gold bars are seen in this picture illustration taken at the Czech National Bank in Prague January 31, 2011.
Credit: Reuters/Petr Josek
NEW YORK |
NEW YORK (Reuters) - Gold hit a second consecutive record high on Thursday as mounting concerns over a worsening euro zone debt crisis and fears of U.S. default powered the metal's longest winning streak in five years.
Bullion notched a ninth straight day of gains, the longest since October 2006, and one shy of its best streak in over four decades. The precious metal has risen more than 7 percent since its winning streak began.
Analysts forecast gold would extend its rally further, with one saying it could reach $2,000 an ounce. A Reuters poll showed gold prices should average $1,550 an ounce in 2012.
Gold pared gains after hitting a record near $1,600 as the dollar reversed losses after Federal Reserve Chairman Ben Bernanke crushed speculation that another round of monetary easing was on the way.
"The dollar, which is so oversold ... went through a reversal against every currency, and gold is caught up with that," said James Dailey, portfolio manager of the TEAM Asset Strategy Fund, which oversees $200 million in assets.
Spot gold touched a record $1,594.16, and was up 0.3 percent at $1,586.11 an ounce by 3:05 p.m. EDT.
U.S. gold futures for August delivery settled up $3.80 an ounce at $1,589.30, after trading between $1,579.40 and $1,594.90.
U.S. futures trading volume topped 200,000 lots for a second day, in line with its 30-day average and one of the busiest days since May, as investors switched their focus back to gold from equities.
Tom Fitzpatrick, chief technical strategist at CitiFX, said gold could rise to a record between $1,700 and $1,750 in the next two to three months based on momentum and past rallies.
The metal's next technical resistance comes at $1,660, near a channel top dating from its rally that started in August 2010.
The metal was underpinned by safe-haven demand as euro zone countries grappled with the issue of involving the private sector in tackling Greece's debt pile. Investors fear the crisis could hit Italy, one of the region's largest economies.
Gold was weakened with commodities and other risk assets after Bernanke reiterated that the Fed would be ready to inject more money into the system should the U.S. economy worsen, but said the time had not come yet.
The metal may surge to $2,000 if the Fed starts a third round of U.S. debt purchases, Michael Pento, a senior economist at Euro Pacific Capital Inc, said. "People will be forced into buying gold," Pento said.
NO SIGNS OF U.S. DEBT DEAL
Also underpinning gold is mounting uncertainty over a deal to raise the U.S. debt ceiling to preserve low borrowing costs for the world's largest economy.
U.S. President Barack Obama and top Republicans faced growing pressure at home and from the United States' biggest foreign creditor, China, on Thursday to stop deficit talks from spiraling out of control and sending shockwaves through the global financial system.
The dollar's reserve-currency status would be severely undermined and that would boost gold if the country defaults on August 2, the U.S. imposed deadline to raise the debt limit.
Looking forward, a poll of 15 analysts conducted by Reuters in the past two weeks has returned a median forecast that gold prices will average $1,550 an ounce in 2012.
Silver rose 0.8 percent to $38.55 an ounce, building on the previous session's near 6 percent rise, its best one-day performance in over two months.
The gold:silver ratio -- the number of silver ounces needed to buy an ounce of gold -- eased to its lowest since late May at around 40.
Among platinum group metals, spot platinum rose 0.7 percent to $1,763.74 an ounce, while spot palladium rose 0.1 percent to $773.25 an ounce.
(Additional reporting by Jan Harvey in London; Editing by Dale Hudson)
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Portugal: 79 %
Spain: 48 %
Ireland: 69 %
Germany: 53 %
US: 65 %
So, nothing to worry about ? Well, that is of course not true when one considers state pension funds are not taken into consideration. In blunt words, nobody gets a pension to pay out the state debt. Which of course is repulsive and is definitely also to be earmarked as default. So net debt is quite a bad indicator, although some US politicians like to use the figure to cover up their mess. It’s just convenient to them Keynes said something like this IN A TIME WHEN THERE HARDLY WERE ANY STATE PENSIONS. The only proper definition is GROSS debt, which shows the following picture for 2010:
Portugal: 83 %
Spain: 63 %
Ireland: 94 %
Germany: 78 %
US: 97 %
Please notice that there are countries in here which Moody’s has set as JUNK. Except the highest debtor, which is the US, with a wonderful top notch AAA rating. How can this be ? Is the US committed to balance their deficit ? $ 4 Trillion in TEN years ? This is highly doubtful because there would be TWO other elections until 2021. It’s just postponing hard measures into the future so other parties can take the blame. Truth is, even with this small cut – it’s actually promising to overspend $ 20 Trillion in ten years – no serious dent will be made in the upward debt spiral.
The faulty logic that Moody’s uses is that the debt ceiling needs to be raised in order to maintain an AAA rating. So, how does this sound ? Moody’s is saying that the US Government NEEDS TO OVERSPEND MORE and that they will support it with a high rating ? Poor investors, who will take the hard restructering cut that will certainly follow and were doing so trusting on the rating from Moody’s.
The emporer (US Government) is walking around without clothes but the tailors (Moody’s) are saying this is because the fabrics are so light.
cross-posting like this across several forums is a cheap shot and frowned upon by most. You’re only weakening your points by obviously broadcasting them everywhere you can.
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Regarding the gold price spike:
Some already wealthy people are going to make a killing when they sell off their gold at the peak of this panic spiked by the threat of a default. I wonder if that wasn’t part of the intention all along of forcing the GOP to hold off on any comprimises knowing that some resolution would be reached before 8/2. After the debt ceiling is raised, gold will drop back down to pre-peak levels or lower with a few people making huge profits selling off at the peak funded by the losses of the rest.
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