Gold Above $1,700 An Ounce After U.S. Credit Downgrade
August 8, 2011By James O'Dell
August 8, 2011, Los Angeles – Gold bullion prices rallied 0.92 percent or $15.10 to close at $1,663.40 an ounce on Friday after the Dow lost over 500 points on Thursday and investors looked to physical Gold as a haven for their investments, also during Friday's session a rumor circulated that Standard & Poor's ratings service may downgrade the U.S. credit rating, the rumor proved to be true later in the day when S&P made the announcement. The price of Silver slipped 1.34 percent or $0.52 to close at $38.33 an ounce while the Gold/Silver ratio rose to 43.40, as Silver under-performed Gold.
Gold spiked higher in Sunday night trade, hitting all-time highs above $1,700.00 an ounce, following S&P’s downgrade of the nation’s credit rating from AAA to AA+, denying the U.S. the coveted rating it had held for 7 decades. The price of Gold is higher by more than 20 percent so far this year. "What people are realizing is that dollar and euro currencies have real problems and I think that's manifesting in the Gold price," said Dominic Schnider, executive director at UBS. "I would say the way things evolve right now I really could even imagine $2,000 being in the cards."
The move by the S&P in downgrading the U.S. credit rating prompted the European Central Bank (ECB) to announce on Sunday that it would “actively implement” its bond-buying program and begin purchasing the sovereign debt of struggling Euro-zone nations. The ECB welcomed promises of new deficit cutting measures and economic reforms by Italy and Spain as well as the pledge by France and Germany that the euro zone's rescue fund, once operational sometime in October, will be responsible for the bond buying.
"It is on the basis of the above assessments that the ECB will actively implement its Securities Markets Program," an ECB statement said. The statement signaled a huge leap forward in the ECB's efforts following a modest bond buying effort last week that failed to stem contagion to the euro area's larger economies. "The uncertainty in the financial markets is keeping Gold prices underpinned. It's essentially safe-haven buying," said Ong Yi Ling, investment analyst at Phillip Futures. Don't leave your assets unprotected during these times of economic and geopolitical uncertainty, invest in physical Gold and Silver bullion and protect your wealth in 2011.
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