With Signs That Economy Could Stumble, Gold Rises
By The Associated Press
Potential bad news about the economy was good news for the price of gold and other metals on Monday.
Many investors plow money into gold when they're worried about the economy, and the day brought several points to worry about. In Italy, which was counting election results, prospects for political stalemate were strong as center-left and center-right parties wrestled for control of Parliament.
In Great Britain, investors struggled to digest the unwelcome news that Moody's, late Friday, had stripped the country of its triple-A credit rating. In the U.S., investors were waiting for Ben Bernanke, chairman of the Federal Reserve, to testify to Congress on Tuesday and Wednesday about the state of the economy. Investors will be watching for any indication of how long the Fed plans to keep buying bonds to stimulate the economy.That's important to gold prices because the bond-buying can cause inflation, and some investors like to buy gold to protect themselves against inflation. So if Bernanke says the bond buying will continue, gold prices will probably keep rising. On Monday, gold for April delivery rose nearly 1 percent, up $13.80 to $1,586.60 per ounce. May silver was up nearly 2 percent, rising 52.7 cents to $29.047 per ounce. Analysts at Kitco predicted a volatile week for gold. "Be prepared for swift and abrupt moves as the market becomes one of interpretation in the short term," Peter Hug, global trading director, wrote in a note to clients. Other key metals were also up, even as U.S. stocks fell. May copper edged up 1.05 cents to $3.561 a pound. June palladium rose nearly 2 percent, $14, to $751.50 per ounce. April platinum was up almost 1 percent, $13.30, to $1,620.70 an ounce. Industrial metals, however, are tied more directly to how traders feel about the economy they tend to rise when hopes about the economy do too. And George Gero, at RBC Wealth Management, said he wasn't sure how long their climb would last.
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