This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Gold Prices Settle Higher

NEW YORK ( TheStreet ) -- Gold prices were popping Tuesday as spooked investors bought gold as a safety net against geopolitical unrest and a falling euro.

Gold for August delivery, the most actively traded contract, settled $11.90 higher to $1,226.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,230.60 and as low as $1,211.60. The U.S. dollar index was rising 0.19% to $86.68 while the euro was sinking 0.60% to $1.22 against the dollar. The spot gold price Tuesday added $9, according to Kitco's gold index.

Gold prices settled up double digits after traders digested the news of Spain's debt downgrade by Fitch. The announcement that the ratings agency lowered its rating from AAA to AA, with a stable outlook, came on Friday as many traders were already on vacation for the long holiday weekend. Investors traded out of stocks and some gold positions in order to have cash on hand for the weekend. Now traders are putting the cash to work in gold as a safe-haven asset. The euro fell to its lowest level in more than four years on rumors that France's debt rating might also get whacked with a downgrade. Many experts are still anticipating euro parity with the dollar.

Also supporting higher gold prices was Israel's attack on the flotilla of aid relief ships, which broke a blockade to bring supplies to Gaza and left nine people dead. The ramp-up of violence in an already tumultuous region buoyed gold prices as gold retained its appeal as a hedge against a financial and military crisis.

Gold prices have settled above the critical $1,220 level and are now eyeing its old record high of $1,249 an ounce. Two factors waiting in the wings to drag on gold prices are an economic slowdown in China and weakening physical demand from India.

Why Gold Prices Will Hit $1,300

Suresh Hundia, head of Bombay Bullion Association, told Reuters that India's gold imports fell 39% in May as prices hit new highs. India is typically very price sensitive and focused on silver and recycled gold during its strong gold-buying Hindu festival.

Investors are still concerned over an economic slowdown in China. China has been taking steps to control its ballooning real estate business as well as restricting the amount of money in circulation after reporting an 11.9% growth in the first-quarter. The government has raised the reserve requirement for banks three times in the last seven months and these steps coupled with slowing export demand from Europe due to the sovereign debt crisis could shrink China's economy more than expected.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
GLD $113.75 -1.14%
ABX $11.14 -1.30%
AU $9.48 -3.85%
FCX $19.25 2.40%
GG $18.19 -1.30%


DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs