NEW YORK (
were moving higher Tuesday as safe haven buying continued despite a recovery in risky equities.
Gold for August delivery settled $9.90 higher to $1,234.40 at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,237 and as low as $1,221.10 on light volume. The
was slipping 0.62% to $85.97 while the euro added 0.93% to $1.23 against the dollar. The spot gold price Tuesday was rising more than $10, according to Kitco's gold index. Spot gold led gold's rally today indicating that investors were opting for the physical metal over paper gold or future contracts.
. Gold was helped by the downgrade of
Greece's credit rating
by Moody's. The cut came as no big surprise to investors, but the news tempered the euro's rally and increased gold's appeal as a safe haven asset. Investors seemed to be playing both sides of the risk trade Tuesday. On the one hand buying equities for more risky exposure, but on the other hand still buying gold as a safety net.
Gold prices will continue to take their direction from eurozone debt fears and will look toward Thursday's
consumer price index
data. The CPI measures inflation, and many investors have been buying gold as a hedge against money printing and a devalued dollar. However, according to
, the CPI is expected to fall 0.1% in May, indicating that inflation should stay firmly on the sidelines, which could prompt some gold selling as investors readjust their positions.
>>Video: Fear Will Push Gold to $1,300
Over the long term, limited inflation risk will support the
decision to keep rates low for an "extended period of time" and, in fact, falling prices could be a sign of deflation. In either scenario, gold bugs believe gold prices will head higher as fiscal uncertainty in general will lead to safe-haven buying.
In the short term, however, gold prices seem stuck in a narrow trading range. Any dip near the $1,220 area is met with bargain-buying, and momentum finally pushed prices past $1,230 an ounce. However, summer is typically a slow buying season for gold. A lack of any major festivals or wedding seasons in India puts pressure on jewelry demand. If gold prices stay strong during the coming months, this could be a bullish indicator for prices.
"Overall the fundamentals still remain," says Toon van Beeck, senior industry analyst at IBISWorld. "
But once we see another fear incident, this should push gold maybe beyond the $1,250 mark and reaching maybe $1,300."
Gold Prices in No Man's Land
settled up 16 cents at $18.57, and copper closed up 1 cent at $3. Both metals will most likely be subject to profit-taking after their strong two-day rally triggered by better than expected industrial data from eurozone nations.
Gold mining stocks, a more risky and more profitable way to
, were stronger.
SPDR Gold Shares
was rising 0.75% to $120.50 while and
Market Vectors Gold Miners ETF
was rising more than 2% to $51.01. Other miners
were rising $13.72 and $6.41, respectively.
Written by Alix Steel in New York
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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.