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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Gold Prices Get Safe-Haven Boost

NEW YORK (TheStreet) -- Gold prices soared Friday as the crisis in Egypt exploded and as traders jumped into gold as equities corrected.

Gold for April delivery was up $21.90 to $1,341.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,348 and as low as $1,309.10. The spot gold price recovered from Thursday's selloff up nearly $30 throughout the day, according to Kitco's gold index.

The U.S. dollar index was up 0.50% to $78.15 while the euro was down 0.94% to $1.36 vs. the dollar.

There was a slew of factors pushing gold higher Friday. First, the metal had been under a barrage of technical selling in 2011. The word capitulation, however, was being thrown around Friday after reports circulated that SHK Asset Management sold gold future positions that came with a $850 million price tag. Open interest of 81,000 came out of gold on Monday. The Wall Street Journal first broke the news and said that Daniel Shak, who runs the fund, got spooked by a margin requirement increase and gold's recent selloff and decided to ditch his positions.

The shakeout of the "fast" money led many investors to see this week's selloff as a bottom, which was prompting a flood of money into the metal.

"I think we are [within] 1% to 2% of the bottom," says David Banister, chief investment strategist for ActiveTradingPartners.com. "I would think that aggressive gold investors would think about getting long here."

And aggressive they were. Gold prices were trying to find their footing in early trading but after the U.S. said the economy grew only 3.2% in the fourth quarter when expectations were for 3.7%, traders dumped stocks and fled to gold. Rapid buying can trigger buy orders in which traders are forced to buy as well as shake out any shorts who are then forced to cover positions.

Gold also glimmered as a safe haven asset as the crisis in Egypt erupted and panicked investors parked their cash in gold. The other concern is that the political unrest in Egypt will spread throughout the Middle East and North Africa.

"There is a major uncertainty [as to] which parties will gain power. This geopolitical uncertainty should be quite bullish for gold and oil," says Jeb Handwerger, editor of GoldStockTrades.com. Handwerger does concede that a further shakeout might be needed before gold prices can maintain higher prices.

It took a few days for gold's safe haven appeal to attract investors. Moody's warned on U.S. debt Friday saying it could issue a negative outlook within the next two years. Although no rating downgrade is imminent, it might not be far off. Japan's rating was downgraded by S&P on Thursday, Japan's first downgrade since 2002. Neither really moved gold prices.

The riots and protests across the Middle East and North Africa have been bubbling for two weeks now, but the protests in Egypt struck a chord with investors. The military there is known for being very violent, the country's Internet connection was severed and the media quickly picked up and distributed dramatic pictures of the clash between the government and citizens.

The protests dragged on the stock market which made gold a better place for investors to put their cash. Confusing earning reports from Ford (F) and Amazon (AMZN) were also weighing on equities.

The remaining factor driving prices was demand for the physical metal.

Pat Heller, general manager at Liberty Coin Service, said that customers are asking to be told when prices in gold and silver have bottomed before buying coins and bullion. This means the demand is out there waiting to jump into action.

"We were selling more gold coins and ingots to retail customers as prices were rising late last year ... [but] our retail sales of bullion-priced silver coins and ingots have increased with the price drop. Not extreme, maybe up 25% from the last quarter of 2010," Heller said.

In terms of silver, down 13% in 2011, Heller says that if prices recovered and held at $28.50 then retail demand could really take off. Heller says that even with the recent selloff, however, supply is tight for silver coins and ingots.

"Large orders for Silver Eagles are now one-two weeks delivery, one-ounce silver rounds and rectangles are one to two weeks, 10- and 100-ounce silver ingots are on the brink of not being available for immediate delivery."

Silver prices were up 88 cents to $27.91 while copper was up 3 cents to $4.37.

Most Recent Quotes from www.kitco.com

Gold mining stocks, a risky but profitable way to buy gold, were soaring. Kinross Gold (KGC) was up 1.08% at $16.89 while NovaGold (NG) rallied 4.17% at $13.75. Other gold stocks New Gold (NGD) and Gold Fields (GFI) were trading at $8.14 and $15.96, respectively.

--Written by Alix Steel in New York.

Readers Also Like:





>To contact the writer of this article, click here: Alix Steel.

>To follow the writer on Twitter, go to http://twitter.com/adsteel.

>To submit a news tip, send an email to: tips@thestreet.com.

Stock quotes in this article: KGC 
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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