NEW YORK (
Friday hit a new high for 2010 as investors bought gold as a safety net against ballooning European debt.
Gold Prices Will Hit $1,200, Then Sell-Off
Gold for June delivery was adding $11.50 to $1,180.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Friday has traded as high as $1,182.50 and as low as $1,167.80. The
was slipping 0.07% to $81.94 while the euro rebounded 0.57% against the dollar. The spot price today was up over $11, according to Kitco's gold index.
The bulls are hoping
soon as investors buy the precious metal as a hedge against global currency devaluation. The popular gold ETF,
SPDR Gold Shares
added another six tons on Thursday, bringing total tonnage to a record 1,159. The GLD is a popular way to invest in gold because it gives investors exposure to spot gold prices without having to own futures contracts or the physical metal. The
Friday up 0.98% to $115.40, but shares still have yet to break its 52-week high of $119.54.
Although a resolution to the
Greece debt crisis
will most likely be announced before the end of the weekend, investors are panicked over rising debt levels worldwide. In order for the European Union, dominated by Germany, to release money to Greece, the country had to slash its budget deficits by 10%-11% of GDP over the next few years to save the country 24 billion euros. Details include an increased retirement age, wage freezes, bonus cuts and sales tax increase.
The news triggered general risk appetite and helped stocks. Gold had been trading as a risk asset over recent years, but when Standard & Poor's declared war on sovereign debt ratings this week, gold turned to its traditional role as safe haven. In times of financial crises, investors buy gold as a more reliable form of money. Many analysts expect gold prices to skyrocket in tandem with debt levels. Nouriel Roubini, U.S. economist, is quoted as saying that Greece's debt issues might be "the tip of the iceberg." Portugal and Spain also have rising debt levels and the U.S. is $14 trillion in debt, although some analysts believe the country will never lose its triple A credit rating.
"Gold looks set to be driven by further safe-haven investment demand," says James Moore, analyst at thebulliondesk.com in his daily metals report, "
Gold is on course to challenge $1200 with the 6-tonne increase in SPDR holdings yesterday a clear indication of the concern investors have towards the European debt situation and its impact of Eurozone economic recovery." Gold prices have rallied 2% this week and are eyeing the next resistance level of $1,185 an ounce.
were up 10 cents to $18.68 while copper prices were adding 1 cent to $3.36.
Mining stocks, a more risky but more profitable way to
, were mixed.
was trading at higher at $43.97 while
was rising 1.18% at $56.48. Other large cap miners
were at $19.19 and $43.72, respectively.
Freeport McMoRan Copper & Gold
, a company tied to global spending and economic recovery, were slipping 2.26% to $75.96 while
was up 2.13% to $11.01.
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.