NEW YORK (TheStreet ) -- Gold prices Thursday were slipping after touching a new 2010 high as investors took profits and awaited for Greece's financial aid package.
Gold for June delivery was down $7.60 to $1,164.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,171.80 and as low as $1,162.20. The U.S. dollar index was falling 0.36% to $82.08 while the euro firmed 0.11% against the dollar. The spot gold price Thursday was adding over $3, according to Kitco's gold index.
Gold prices Wednesday hit a new 2010 high of $1,174.50 an ounce after Standard & Poor's struck Europe again. The rating agency downgraded Spain's debt to AA with a negative outlook, which triggered a flight to safety into gold. As paper currencies deteriorate in value, investors buy gold as a form of money that retains its value.
Momentum buying petered out Thursday as investors digested more sovereign debt news. Fitch said it reaffirmed its AAA rating for Spain which was supporting a stronger euro. The rating agencies have been under the spotlight for being too lax with their AAA ratings of complicated mortgage-backed securities during the subprime crisis.
Reports indicate that the European Union is working on a bigger multi-year financial aid package for Greece, so even though its debt is enormous, the news calmed investors. The International Monetary union and EU are still in talks about the bailout, but Reuters said Germany would be ready to give Greece money before May 9. The European Central Bank is calling for a swifter resolution to the Greek debt crisis to prevent a default. The yield on Greece's 10-year bond fell slightly to 9.73% from over 10% as investors felt more secure about lending money to the country.
Paper gold, or futures contracts, and the spot price diverged slightly Thursday as traders closed out some contracts as the month draws to a close. Meanwhile, investors who are still skittish over European sovereign debt continue to buy physical gold as a safety net.
"It's an indecision day here," says Jon Nadler, senior analyst at Kitco.com. "Gold could still finish on the positive side on the day. There's still some push among the longs to try to make this $1,175 resistance area ... fall ... [But] there are definite road blocks there before we can talk about $1,200, $1,210."
