NEW YORK (TheStreet ) -- Gold prices were rising Monday as investors bought gold as a safe-haven asset.
Gold for August delivery was down $7.30 to $1,225 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Monday has traded as high as $1,225.50 and as low as $1,212.10. The U.S. dollar index was relatively flat at $88.24 while the euro fell 0.36% to $1.18 versus the dollar, which was slightly higher than its recent $1.18 4-year low. The spot gold price Monday was adding over $6, according to Kitco's gold index.
Gold prices were on the rebound Monday as investors decided to buy gold as a safety net. Earlier in trading, gold prices were slipping as traders needed cash to cover Friday's massive stock losses. The Dow Jones Industrial Average fell over 3% on Friday on the heels of a disappointing U.S. unemployment number . Overseas equities followed suit Monday and slid as well on the weak U.S. data and on worries that Europe's debt crisis would spread to eastern countries like Hungary.
Gold prices typically benefit from financial crisis fears as investors need a safe place to put their money and often choose gold. On Friday, gold prices settled more than $7 higher at $1,217.70, which prompted investors to take profits on one of the only assets yielding a good return. Lower gold prices then provided a good buying opportunity for those investors look to buy at a "discount," which makes $1,200/$1,190 a solid support area.
Most analysts expect the risk trade to confine gold prices to a tight trading range as gold continues to reach for its record high of $1,249 an ounce. If risk appetite improves, investors could sell gold to raise money and buy stocks. If risk disappears, investors will opt for the safety of gold. Gold is also subject to peer-pressure buying which means that when there is a massive push into or out of gold by hedge funds or big-named investors, retail investors tend to follow suit.
"The market is in a pretty tight consolidation phase right now," says David Morgan, founder of Silver-Investor.com. "To get to the upside we have to break the $1,240 area and ... a good strong [support] would be the $1,180 area."
Silver prices were adding 23 cents to $17.53 while copper prices were losing 5 cents to $2.76. Copper heavyweight Freeport McMoRan Copper & Gold(FCX) has said that China's attempts to slow its economy will pressure copper demand and weigh on prices over the long term. Shares of Freeport were falling almost 2% to $61.57.
