Investors selling Gold to restore portfolios

Once the smoke clears in the eurozone, analysts are suggesting gold prices could start moving back up.  Marcus Grubb, managing director of investment at the World Gold Council, shared his thoughts on future gold prices by saying, “Gold, used an alternative to the U.S. dollar by investors in search of safety, could see a move higher once markets have greater clarity on a resolution to the Greek debt crisis.  As we’ve seen in previous times in this crisis like in 2008, you typically get a shift into gold once it becomes clear what the scenario is going to look like.  At the moment we still don’t know what the scenario will look like.  On the other side, investors have been selling gold as they’ve raised cash weightings, moved into the dollar, invested in Treasurys.  They’ve sold gold in order to repair damage in their portfolios.”

Jim O’Neill Goldman Sachs strategist spoke with CNBC regarding how investors and the market are reacting Europe’s financial mess.  “I can sort of see why people are freaking out.  The U.S. is on the mend, and yet the markets are now obviously worried about the interconnectivity of bank lending because of the unfortunate recent episode of JPMorgan and, of course, the staggering mess in Europe.”  A final election in June will conclude if Greece will stay with or leave the eurozone.  If Greece leaves, it will then initiate its own currency and will have to start paying off the estimated $618 billion debt.

The U.S. May experience a slower economic growth than previously expected with the end of extended benefits for the unemployed.  This may trigger some to accept jobs they otherwise would prefer not to or give up on searching for a job and drop out of the labor force.  Andrew Tilton, at Goldman Sachs Group Inc. is optimistic about the end of the extended benefit program he said, “There has been an improvement in the availability of jobs.  In a better labor market, people losing their benefits would be more likely to look and to find a job, and less likely to simply drop out.”

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,594.30, Up $0.90.
  • Silver, $28.52, Down $0.27
  • Platinum, $1,468.10, Up $6.80.
  • Palladium, $616.40, Up $10.80.
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