The contract price of gold seems to be the first weekly decline in three weeks. The fall in the price of the sleek yellow-related measures that the European leaders agreed to provide a new bailout for Greece.
Friday morning, the contract price of gold for quick delivery fell 0.3 percent to 1586.25 U.S. dollars per troy ounce on the Comex in New York. At 10:02, the same contract at the level of 1590.53 U.S. dollars per troy ounce. Meanwhile, gold prices in the spot market is currently experiencing a decrease of 0.2 percent.
“The decline in gold prices is always happening in the market when prices are climbing higher. By this week, we saw what a huge jump in gold prices. However, the level of demand is still very strong and able to absorb the sell gold in the market,” said Gordon Cheung, trader Standard Merchant Bank (Asia) Ltd..
As is known, after eight hours of talks in Brussels, Belgium, it was decided that Europe will provide new assistance to Greece worth 159 billion euros, equivalent to 229 billion U.S. dollars. Related to that, they recommend to the bondholders to participate in buying the bonds.
In addition, Europe will also empower the rescue fund worth 440 billion euros to buy bonds in a number of troubled countries in the European region. Another objective was to avoid the spread of the crisis in the region.
Should Buy Gold?
Gold’s reputation as a safe investment vehicle continue to rise until it reaches the 1600 United States dollars (about USD 13.6 million) per troy ounce. One troy ounce is equivalent to 31.1 grams.
Investors are worried about debt problems in the U.S. so they buy gold and make gold prices rose again to 1602 U.S. dollars per troy ounce at the close of trading Monday. The price was a record high, but still below the price of gold in the 1980s. At that time, the gold price 850 U.S. dollars per troy ounce, equivalent to 2,400 U.S. dollars at current prices after inflation are calculated.
Gold prices continue to rise lately due to debt problems in the U.S. and Europe. Currency U.S. dollar and the euro to fluctuate so emaslah is a safer investment vehicle. Why is it necessary to have gold?
“Gold has had a long history as a means of protecting wealth,” Tom Winmill said, portfolio manager at Midas Fund which manages a fund of 96 million U.S. dollars.
The investment manager has gold reserves and gold is still there in mine. “In 6,000 years, gold is one type of asset that is almost never the value to zero,” he said.
He said gold prices could reach 1800 U.S. dollars per troy ounce in late 2012. According to data from the World Gold Council, gold prices have gone up 21 percent according to the U.S. dollar in the last 12 months to 30 June.
Gold rises beyond any currency rates, rose 2.2 percent against the euro, 10.4 percent against the Japanese yen, and 16.5 percent against the Indian rupee. However, gold fell 5.5 percent against the Swiss franc is considered one of the most secure currency in the world.
The faster the rise in gold prices in the last two weeks. Gold has been rising for 10 consecutive days until Monday since July 1 when the price of gold reached U.S. $ 1482.60 per troy ounce. The price of gold has actually been rising since early 2009 when it was still worth 880 U.S. dollars per troy ounce.
The U.S. central bank the Federal Reserve to keep interest rates remain low near zero percent since December 2008. Low interest rates weaken the U.S. dollar exchange rate and make more gold prices rose.
Investors also seem more like gold. Demand for gold from investors rose 26 percent in the first quarter this year compared to last year. The increase includes an increase in requests from dentists for dentures made of gold and electronics companies.
“Demand for gold is higher is also visible from speculative investors like hedge funds,” said Jon Nadler, analyst at Kitco Metals metal.
Gold prices could drop if investors regain confidence that the U.S. will not default and the 27-nation European Union is not troubled by debt problems in the region. Ready to buy gold?