Analysts believe that the significant dip in gold prices presents a strong buying opportunity for investors. With the European Union poised to announce a multi-billion euro bailout of Greece, and the recent approval of a US healthcare reform, analysts expect gold to rise in the long-term as countries continue to borrow money to fund government initiatives. See the following article from The Street for more on this.
Gold prices were slipping double digits as the U.S. dollar rallied.
Gold for April delivery was falling $12 to $1,095.60 an ounce at the Comex division of the New York Mercantile Exchange. Gold prices Monday have been as high as $1,108.60 and as low as $1,092.10. The U.S. dollar index was rising 0.07% to $80.82. Gold’s spot price was down more than $11.30, according to Kitco’s gold index.
Persistent fears on Greek sovereign debt were weighing on the euro, which supported the U.S. dollar and pressured gold prices. German Chancellor Angela Merkel announced over the weekend that the EU shouldn’t put a Greek bailout plan on the table at Thursday’s summit. Merkel also said the Greek Prime Minister George Papandreou has said that Greece would not ask for EU support.
The EU had previously announced a multibillion euro bailout of Greece, but details had remained sketchy. If the EU doesn’t come to Greece’s aid, then the country might have to turn to the IMF for funding. The uncertainty has been dominating gold prices as they look to the euro for direction.
Some analysts are shrugging off recent volatility and using any dip around $1,100 an ounce as a buying opportunity. “Ten dollars on a $1,100 gold price is the same as 10 cents on an $11 stock … I don’t think that this kind of variation … is any big deal,” argues J.C. Doody, editor of goldstockanalyst.com. “We’re still printing money like there is no tomorrow.” Doody thinks that Obama’s health care reform bill could be a long term catalyst for gold. “[Health care] affects [gold] from a monetary asset … in the bigger picture … to pay for all of these things we’re obviously going to have to borrow more money … gold is the escape mechanism.”
Silver prices were slipping 31 cents to $16.72 while copper was down 3 cents to $3.33.
Mining stocks, a more leveraged way to invest in gold, were struggling. Barrick Gold(ABX) was down 0.89% to $39.07. NovaGold(NG) was adding 0.27% to $7.40 after the company announced that Donlin Creek gold reserves increased by 4.3 million ounces. NovaGold partners equally with Barrick Gold at Donlin.
Other large-cap miners Kinross Gold(KGC) was lower by 0.78% to $17.75, while Goldcorp was down 1.67% to $38.22. Newmont Mining(NEM) was down slightly to $50.49.
Shares of Eldorado Gold(EGO) were sinking 2.50% to $12.50 despite an upgrade from TD Newcrest from hold to buy.
The popular physically backed ETF, SPDR Gold Shares(GLD) was falling 0.88% to $107.35.
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.