The Price Of Gold Has Soared PDF Print E-mail
Written by Kathryn Smith   
Thursday, 06 May 2010 18:34
Most of the specialists believed that because of the financial crisis in Greece, the demand for the yellow metal will fall. But instead the precious metal just hit a four-month high after Standard & Poor's, the rating agency, has lowered Greece's and Portugal's credit ratings.
by KathrynSmith


Most of the specialists believed that because of the financial crisis in Greece, the demand for the yellow metal will fall. But instead the precious metal just hit a four-month high after Standard & Poor's, the rating agency, has lowered Greece's and Portugal's credit ratings.

In sterling points this actually means that, gold hit a new record of 767 pounds. The problem that arises from this is that Greece will no longer have vital access to European Central Bank funds. Furthermore, some investors will not be able to buy Greece's debt anymore.

After Portugal's downgrade, the price of gold rose significantly from 1.145 dollars an ounce to 1.172,60 dollars an ounce. This rise was important when it was expressed in dollars but it was even more so when it was expressed in other currencies, except the yen. The Japanese currency is strong even if there are serious concerns about the country's fiscal position. Equities and commodities, including oil and cooper did very well on the market in the last couple of days. The downgrades have also managed to convince the investors to come out of riskier assets. Because the precious metal is considered a safe haven it was one of the few commodities that is on the rise.

The world's largest gold-backed exchange-traded fund is said to have increased its holdings to the astronomical record of 1.146,83 metric tons of gold in only one day. The downgrade also affected the value of the FTSE 100 Index and the New York's Dow Jones industrial average fell 1.9 pc while the Japan's Nikkei 250 was down by 2.5 pc.

Gold has always been seen as a serious investment. This is why economists advise us to purchase the yellow metal. This asset is a good way of diversifying one's portfolio.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

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