Shares of gold mining companies rose Friday after the price of the metal surged in U.S. trading to a four-month high. This is a golden deja vu moment many of us remember from earlier this year.
Gold for August delivery added $16.40 to $958.40 an ounce on the New York Mercantile Exchange, after earlier rising as high as $969.10, the highest since March 19. By day's end the spot price closed over $963, up $17 for the day.
James Steel, an analyst with HSBC in New York was quoted by the Associated Press as saying that there are similarities between the current situation and the situation just a few months ago when gold was going through the roof.
"Nervousness about the U.S. economy, record energy prices and a falling dollar helped propel gold 34 percent higher in the past year, but prices have been unable to crack the $1,000 level first breached in March after the collapse of Bear Stearns & Co. Gold is viewed as a safe-haven asset during times of economic instability and rising inflation, he said."
"The $1,000 an ounce mark accompanied a bank failure the last time so it's questionable whether the situation now is as severe, but that doesn't mean it won't go back to that level," the analyst reportedly said.
Two of the biggest gold performers of the day was Yamana (NYSE:AUY) up over 6% for the session and Barrick Gold (NYSE:ABX) up 5%, both on higher than average volume. On the silver side the biggest beneficiary was Silver Wheaton (NYSE:SLW) which gained a whopping 7% in Friday's session.
Casey's Daily Resource Plus (www.CaseyResearch.com) chimed in this morning with the following timely comments:
"That the metals did as well as they did was heartening to investors, as equities rebounded and the dollar strengthened during the day. But oil blasting higher was apparently enough of a stimulus. And Middle Eastern instability also played in."
The Hightower Report summarized their thought this way: “With a big range up extension in August gold today in the face of a minor weakness in the US Dollar, would seem to suggest that something other than classic currency related forces were serving to boost prices. Clearly ongoing geopolitical uncertainty, concern for the pace of the US economy and recent concerns of trouble in US agency issues provided the gold bugs with a host of safe haven factors to choose from.
"In fact, with some US Administration sources suggesting that the US wasn't going to give Iran a pass on their ongoing violations of UN rules some traders were bracing for ongoing tensions off the Iranian situation. We also suspect that a recovery bounce in oil prices and suggestions from the Fed's Bernanke that the markets were still being presented with ongoing turmoil, suggests that anxiety levels could remain high off a number of angles.”
There were alsoa number of technical factors at work the last couple of days.
