NEW YORK (
) -- The
Thursday touched the $1,200 level as investors bought gold as a safety net against a sinking euro, Greece riots and spreading Portugal debt fears.
Gold delivery for June was rising $24.70 to $1,199.70 an ounce at the Comex division of the New York Mercantile Exchange. Gold prices Thursday have traded as high as $1,201.70 and as low as $1,173. The
was rising 0.66% to $84.73 while the
euro kept making new one-year lows
falling 1.28% to $1.26 against the dollar. The spot gold price Thursday was rising over $20, according to Kitco's gold index.
A plummeting euro is supporting higher gold prices as investors buy gold as a hard asset, a form of money, that keeps its value. Gold prices pushed even higher on news that the Greece parliament passed its hotly debated austerity measures despite more protests in Athens.
Gold Prices Tug of War
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With the debt of European Union nations ballooning out of control, investors speculate that the
European Central Bank
will have to print money to save the day.
The ECB left interest rates unchanged at 1% at its biannual meeting Thursday in Lisbon, but more extreme measures might be needed and analysts will be listening to remarks from ECB President Jean-Claude Trichet for new measures to help debt ridden eurozone countries. Trichet said that "default is out of the question," but has not given any indication about monetizing Greece debt.
If the ECB, which dictates financial policy for the European Union nations, decides to print more euros to bailout Greece, Portugal and Spain, the currency will devalue even further. Although the ECB seems unconcerned with inflation in the near term, perpetually low interest rates coupled with currency printing could trigger massive inflation. Gold prices typically rise in times of inflation as investors favor the hard asset over paper currency.
Gold prices were volatile Wednesday
as profit-takers sold their gold to raise cash while bargain-hunters bought gold at discount prices. Moody's announcement that Portugal's AA rating could suffer a downgrade and news of deadly Greece riots dominated headline news and supported gold prices' tug of war. Gold prices continue to make new all-time highs in euro and the Swiss Franc while they stay shy of their high in dollar terms of $1,227 an ounce.
"Short term both gold and silver will remain vulnerable to dips as investors and traders lock in profits to cover cash," says James Moore, analyst at
. "However, we still expect dips to be viewed favorably as debt contagion fears continue to draw strong safe-haven interest into the market. Overhead targets remain $1,200 in gold ... with support pegged at $1,162/48."
The gold ETF,
SPDR Gold Trust
, added seven tons of gold on Wednesday reaching a record 1,166 tons. The more investors buy shares of the gold ETF, the more gold the trust must buy. Each share is physically backed representing a starting value of one tenth an ounce of gold. Shares were rising 1.91% to $117.91.
Waiting in the wings for gold is Friday's U.S. unemployment number which could affect risk appetite.
The number of people filing for unemployment benefits last week fell
7,000 to 444,000 and
32,000 jobs in April, which was more than expected. A positive reading could put some short-term pressure on gold as investors buy riskier stocks, but over the long term many analysts expect investors to buy gold as eurozone debt fears escalate. Gold's success in touching $1,200 could also trigger profit taking as well as momentum buying confining prices to a tight range for the short term.
contined a two-day losing streak slipping 1 cent to $17.51 while copper prices were down 3 cents at $3.11.
Mining stocks, a more risky but more leveraged way to
, were mixed.
was up 2.26% $43.85 while
was rising over 3% to $55.51. Other large-cap miners
were trading at $17.77 and $43.56, respectively.
downgraded Kinross from buy to hold and cut its price target to $19.
were rising 3.64% to $84.36 after the company said it earned 21 cents a share in the first-quarter.
was trading up 2.81% to $50.10 after the royalty company said it earned 20 cents a share during the third-quarter.
Freeport McMoRan Copper & Gold
was trading over 2% lower to $68.71.
Written by Alix Steel in New York
Alix joined TheStreet.com TV in February 2007. Previously, she held positions in film and theater production, management, and legal administration. Alix has a degree in communications and theater from Northwestern University.