NEW YORK (The Street) — Gold prices were rallying past $1,230 an ounce Thursday as investors bought gold after more signs of a weak labor market.
Gold for December delivery was up $6 to $1,237.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,239.50 and as low as $1,229.50. The U.S. dollar index was down 0.05% to $82.18 while the euro was flat at $1.28 vs. the dollar. The spot gold price Thursday was also adding more than $6, according to Kitco’s gold index.
Gold prices were rising after the Labor Department said weekly initial jobless claims for the week ended Aug. 14 rose to 500,000 last week, which underscored worries that the U.S. economic recovery was stalling out.
Gold prices had been flat before the news as relatively positive news out of the eurozone gave investors little impetus to buy gold as a safe haven asset.
Greece will be able to receive its next lump of financial aid and Bandesbank, the German federal bank, increased growth prospects in Germany for 2010 to 3% from 1.9%. The upgrade is in contrast to the European Central Bank’s statement last week that strong growth within the European Union could not be sustained. Germany’s producer prices also rose more than expected indicating demand for goods.
Gold prices settled above $1,231 an ounce Wednesday for the first time in more than six weeks, but were having a hard time picking up steam. Lack of volume and headline news was keeping gold in a lackluster trading range, which many analysts expect will remain for the rest of the summer.
Summer months typically are slow buying periods for gold as trading volume peters out and China and India consumers curb their gold jewelry buying. In the fall, festival and wedding seasons in Asia jumpstart customer demand.
Frank Holmes, CEO of U.S. Global Investors, said in a recent note that the “September price rises 2.5% above the August price,” which would take prices past their intraday high of $1,264 an ounce.
Investors have been shoring up their gold positions recently. Nicholas Brooks, head of research and investment strategy for ETF Securities, says the firm’s gold exchange-traded fund, ETFS Physical Gold Shares, the smallest physically backed gold ETF in the U.S., “saw nearly $100 million of inflows [last week] … it does appear that investors are moving back pretty strongly into the physical gold [products] and we’ve seen continued inflows this week.”
“Overall, the key driver of gold is going to be the sovereign risk issue and whether we are moving towards slower economic growth on sort of a 6-12 month view and I think the jury is still out on that.”
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