Comex gold futures prices ended the U.S. day session sharply higher and set another new all-time record high of $1,647.80. Strong safe-haven investor demand amid several market place worries continues to boost the precious metals markets, and especially gold. It did not take traders and investors long to look past the U.S. debt limit drama that has drawn to at least a temporary close. Gold last traded up $24.20 at $1,645.90 an ounce. Spot gold last traded up $23.30 an ounce at $1,644.00. Comex silver last traded up $0.906 at $40.24 an ounce.
Gold will continue to see safe-haven investment demand amid the keener uncertainty and anxiety in the market place. Reports overnight said South Korea’s central bank bought 25 tons of gold, while Greece’s central bank added 1,000 ounces to its reserves. When central banks start stocking up on more gold, the gold bulls reckon their own positive stance on the metal remains on very solid footing.
The flight to safety has been the primary market mover and this is unlikely to change in the weeks or months ahead. Sure, there will be short-term ups and downs based on news of the day. But the safety issue is key and it’s going to continue.
This will keep upward pressure on the metals, especially gold since it’s the world’s #1 safe haven. And with the debt battered world financial situation increasingly dangerous and vulnerable, this balancing act will keep investors on edge and quick to run for safety. It’s also an important reason why worldwide demand is growing so quickly. This too is keeping a strong solid foundation under the gold price, boosting upward pressure.
Plus, the likelihood of the Fed enacting more stimulus measures to help the economy is yet another very bullish factor. And Bernanke essentially said they’re prepared to go. The threat of a possible downgrade to the U.S.’s credit rating, by the S&P and Moody’s, heaped further pressure on Bernanke to “do something.” Literally, the heat is on, and with the nearly 100 year old AAA rating at risk, you can be sure the Fed will be quick to act.
The same is true of the politicians. The warnings have been sounded around the globe… The bottom line is, a default would be “catastrophic,” adversely affecting the world markets and economies, similar to what happened in 2008.
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