NEW YORK (
Friday settled from record highs even as the
euro sank to its lowest level in two years
and investors doubted the sustainability of the European Union and its currency.
Gold for June delivery was currently up $1.40 to $1,230.90 an ounce at the Comex division of the New York Mercantile Exchange but off its high of $1,249.70. Its low Friday was $1,217.60. The
was rising 0.91% to $86.22 while the euro continued its decline falling 1.35% to $1.23 against the dollar. The gold spot price Friday was falling $3, according to Kitco's gold index.
Gold prices backed off from their earlier high of $1,249.70 an ounce as investors took profits. Fear continued to be the name of the game as no investors wanted to be heavily invested in the stock market headed into the weekend and were selling equities and gold to raise cash.
Although weak eurozone countries are supported by a $1 trillion bailout, many analysts believe several "plan Bs" are in the works. One plan is that the stronger northern European nations will leave the European Union to form a stronger alliance. Reports indicate that French President Nicolas Sarkozy threatened to leave the EU if Germany did not approve the bailout package.
Although the reports were denied by the French government, it underscored the shaky relationship between the 16 eurozone nations. Another plan circulating among economists is the possibility of a united states of Europe where individual governments would be accountable to a single European government.
Whether or not these theories transpire isn't the issue driving gold prices. It's the fact these theories exist at all highlights investors' lack of confidence in the sustainability of the euro in its current form. The euro was falling to its lowest value since 2008. This despair in paper money is driving demand for gold as investors seek the metal as a form of money that keeps its value.
Despite gold's recent selloff, analysts believe gold prices will trade higher in the medium term as gold keeps its appeal as a safe-haven asset and bargain-hunters buy at discount prices. Gold is also subject to
as investors tend to pile into the precious metal as prices spike because they don't want to miss the trade.
"I had a forecast that we probably
would see the high in gold on a short-term basis, not on a long term basis somewhere between the 7th and the 14th of May," says David Morgan, founder of
. "I think the easy money has been made but the big money has not been made."
were slipping 19 cents to $19.30 while copper was down 10 cents to $3.12.
Gold stocks, a more risky but more profitable way to
slipping along with broader equities
was slipping 1.27% to $45.04 while
was down 0.32% to $57.68. Other large gold companies
were trading at $18.95 and $45.68, respectively.
Freeport McMoRan Copper & Gold
were down over 2% to $69.72. Freeport is strongly levered to the global economic recovery as copper is in high demand as construction projects boom. However, the planned austerity measures from Greece, Spain and Portugal have many analysts worried the countries' gross domestic product will shrink and derail this construction trend and hurt demand for copper.
was down 1.14% to $11.32 while the popular gold ETF
SPDR Gold Shares
was up 0.04% to $120.42.
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.