June 17th, 2010 
Traver 
Tags: An uncertain stock market fueled demand for gold as a safe haven asset. Investors were selling stocks on a flurry of disappointing economic data including higher-than-expected weekly initial jobless claims and were hedging their bets with gold. Lackluster risk appetite was buoying higher prices, and momentum buying tried to push gold past its record of $1,254 an ounce.
Gold is an attractive place for investors to put their money in uncertain times, as it’s money that retains its value. The U.S. dollar has also been considered a safe haven, but as headline risks from the BP oil spill, Greece labor strikes and Spain’s debt issues continue to scare traders, hard assets become more attractive than paper currencies.
Gold prices have continued to rise despite the lack of inflation data in the U.S. which indicates that its general fear and headline risk not inflation that’s triggering gold’s move. Wednesday’s core producer price index rose 0.2% and Thursday’s core consumer price rose 0.1%, both in line with expectations.
Analysts expect gold prices to continue to increase further and recovery as a double digit price move to the upside could trigger profit taking.
“As ever in the short term, anything could happen, but given the continuing degree of sovereign risk, gold is more likely to move higher than lower, making it a best investment” says one analyst. “$1,300/oz remains possible over the summer despite the traditionally negative summer season.”