Saturday, August 28, 2010

The Top 5 Reasons Gold Prices Move

By Alix Steel / TheStreet.com,

Gold prices have risen more than 10% in 2010, closing Wednesday at $1,241 an ounce. Rising unemployment in the U.S., import slowdown in China, weak global economic data, and a struggling eurozone have triggered gold's recent surge, but those issues don't tell the whole story.

Gold prices have regained speed in the past weeks as Cisco's CEO John Chambers hinted at a double-dip recession, and a slew of economic data including rising weekly initial jobless claims have brought into question the health of the U.S. economy, which has trumped any merger news and positive earnings. Gold prices have rallied 5% in August during a typically slow buying season while the Dow Jones Industrial Average fell 4%.

Gold prices are volatile, however. When equities plummet, investors are often forced to sell gold for cash, but any significant dip triggers a wave of buying as investors purchase gold at "discount" prices resulting in a strong tug-of-war for prices. Aside from recent market jitters, there are five other fundamental factors that contribute to gold's strong price moves. (more)

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