NEW YORK (TheStreet) -- Gold prices Wednesday were retreating from their 2010 highs after investors bought gold as a safety net against a euro crash and Greek debt.
Gold for June delivery was rising $2.20 to $1,164.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,170.50 and as low as $1,161. The U.S. dollar index was slipping 0.17% to $82.26 while the euro rebounded 0.32% after hitting an 11-month low against the dollar. The spot gold price today was slipping over $6, according to Kitco's gold index.
Gold prices Tuesday hit an all time 2010 high of $1,172.90 an ounce as gold's appeal as a safe haven investment returned with vengeance. Standard & Poor's slashed Greece's debt rating to junk and downgraded Portugal sovereign credit two notches to A negative, which spooked investors and prompted a flight to safety. Traders bought U.S. treasuries and dollar based commodities like gold. Gold is appealing as a safe haven asset because it is considered money that never loses value.
"[Gold] is really showing its true colors as a safe haven asset right now,' says Nicholas Brooks, head of research and investment strategy for ETF Securities. "In a normal environment if you were seeing this kind of data coming out of the U.S. you would see risk assets going through the roof and to some degree gold might suffer in that environment ... but the Greece issue and the potential impact on the rest of Europe has brought the safe haven aspect [of gold] out."
Many analysts have criticized rating agencies like Standard & Poor's for not responding fast enough to the subprime crisis and for giving weak mortgage backed securities a positive rating. Fitch has already cut Portugal's rating in March but only to double A negative, so the S&P might be trying to stay ahead of the curve this time. Portugal and Spain are also at risk even through their debt situations are not as dire as Greece's. The U.S., so far, has been able to maintain its triple A sovereign debt rating, but with a $14 trillion budget deficit looming over the country, there are some worries that the U.S. might suffer a future downgrade.
