Gold Price News: Gold Clawing Out of the Lows

Gold Price News

Gold’s traditional market movers are out to play this week, pushing gold up, down, and sideways. Uncertainty has always been the main driver of precious metals- the more uncertainty there is at home, and the more uncertainty there is in the world, the more people want to buy gold. This is the hallmark of a “safe-haven” commodity.

Gold moved up to a daily high of $1,187.60 an ounce during European trading hours after grim news came out of Greece. Greek Prime Minister Alexis Tsipras decided to throw the fate of the European Union in the hands of the Greek people, calling a referendum to vote on whether or not Greece should take a bailout proposal from the the International Monetary Fund and the European Union. Additionally, Tripras’ regime decided to close the banks in Greece and institute tight monetary and capital control, moves that are reminiscent of the West’s handling of the Great Depression in the 1930’s. This news did not only reverse gold’s losses after the optimism took its course last week, but brought gold to a five day high.

Gold hasn’t consistently traded higher thanĀ $1,200 since a brief spell in mid May. Still depressing gold prices is the general consensus that the American central bank still plans to raise rates, which is not only indicative and an implication of a strengthening American economy, but will directly harm gold as a non interest yielding asset. Although a hamperĀ on gold prices in the short run, American feds would only raise rates in the face of higher inflation, so factored into the price of gold is its “safe-haven” value against the impending inflation.

The price of gold can stay within the band of $1,160-$1,200 only until the feds raise rate, or Greece bails out. If Gold can truly come out of these lower levels, it will either be a sign of or an outcome of bad things to come out of Europe, or the United States.

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