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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gold Prices Rebound on European Debt Drama

Stocks in this article: KGC AUY AEM EGO

NEW YORK ( TheStreet ) -- Gold prices rallied Tuesday on bargain hunting and safe haven buying as investors took advantage of lower prices resulting from Monday's 3% decline.

Gold for December delivery settled up $16.80 at $1,830.10 an ounce at the Comex division of the New York Mercantile Exchange and were doubling those gains in after hours trading. The gold price has traded as high as $1,838.90 and as low as $1,794.80 while the spot gold price was adding $25, according to Kitco's gold index.

Silver prices added 97 cents at $41.19 an ounce while the U.S. dollar index was down 0.33% at $76.85.

"Strong two-way interest looks set to keep trade volatile in the coming sessions with Greek default concerns, overall diversification and physical interest to keep gold underpinned," argues James Moore, research analyst at FastMarkets, "but the threat of default and its impact on money-market liquidity may see further long liquidation on rallies as investors lock in profits."

The former was in play Tuesday as gold rallied along with stocks, a rarity, as bargain hunting pushed gold higher and modest risk appetite buoyed stocks.

Technical traders are looking to see if gold can hold the $1,792 an ounce level, with a break below signaling another leg lower.

An article in the Wall Street Journal Tuesday said that BNP Paribas could no longer access U.S. dollars, a rumor that has since been denied, but investors seem to no longer trust the word of companies and politicians and the news helped gold.

German chancellor, Angela Merkel, has reaffirmed her commitment to saving Greece from a default after yields on the country's 10 year bonds rose to an euro-era high. Italy also came under heavy pressure in its bond auction Tuesday where the country had to pay up to borrow amid rumors that China might buy Italian bonds.

Rumors also swirled that Merkel and French President Sarkozy would make an announcement concerning Greece today. The confusion and lack of direction was helping gold, but its future will still be murky in the short- term.

"I see a lot of volatility along with other assets in the marketplace," says Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund, "almost twice of what we normally see on a daily basis." Hicks says that the day-to-day action in gold is difficult to explain as investors will be caught between taking profits and buying protection.

Hicks says that markets are prepping for two scenarios -- one where Germany walks away from the Eurozone, something which Merkel has rejected, or that the European Central Bank will be forced to monetize countries' debt, meaning printing money to pay off debt. That's something even the U.S. hasn't done.

Hicks sees gold prices at $2,000. "It's not if, it's when ... there are too many reasons for gold to go up."

Gold mining stocks were hammered Monday. Kinross Gold (KGC) was losing 0.47% to $17.08 while Yamana Gold (AUY) was up 1.21% at $16.74. Other gold stocks, Agnico-Eagle (AEM) and Eldorado Gold (EGO) closed lower at $70.79 and $21.02, respectively.

Related Articles:

-- Written by Alix Steel in New York.

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

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!

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.
Submit an article to us!


DOW 17,894.64 +89.84 0.50%
S&P 500 2,070.75 +0.10 0.00%
NASDAQ 4,769.1480 +3.7680 0.08%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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