NEW YORK (
closed slightly higher Wednesday, erasing earlier losses on safe haven buying as stocks tanked and U.S. inflation heated up.
Gold for August delivery added $1.80 to $1,526.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,535.70 and as low as $1,514.50 while the spot gold price was adding $7, according to Kitco's gold index.
Silver prices ended flat at $35.41 an ounce while the U.S. dollar index was up 1.6% at $75.61 as the euro tanked more than 2%. The euro was plummeting as Eurozone leaders couldn't decide on the private sector's responsibility in another bailout for Greece. Riots were also exploding across the debt laden country as people protested austerity measures, a requirement for more bailout cash. News of a possible resignation by Greece's prime minister following also dragged on the euro and spooked investors.
"Gold and silver are being support by this whole nervousness from investors about the Greek situation in Europe," says Will Rhind, head of U.S. operations for ETF Securities. "A sovereign default or restructuring would be a major event" despite the fact it is already all over the news.
A stronger dollar wasn't keeping gold and silver prices down, although it was tempering their rallies, as the metals gained on U.S. inflation worries. Consumer prices rose 3.6% in May year-over-year and core prices, which excludes energy and food, rose 1.5% year-over-year. Both numbers were hotter than expected.
To top off the bad news in the U.S., stocks were getting hammered after Tuesday's rally and as manufacturing activity in the New York region slowed in June. Industrial production for May also grew less than expected.
Rhind thinks that most participants in the gold market are actually buying as a hedge against inflation. Rhind says if an investor is looking at official numbers, they might be less than impressed, but "rising food prices, rising health care costs, rising energy prices, so therefore the net effect for the consumer is actually one of real rising inflation."