NEW YORK (TheStreet ) -- Gold prices were trading sideways Friday as investors debated between the yellow metal and stocks after the Dow Jones Industrial Average closed below 10,000 on Thursday.
Gold for December delivery was adding $1.9 to $1,239.60 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Friday has traded as high as $1,240.80 and as low as $1,235.40. The U.S. dollar index was relatively flat at $82.96 while the euro was unchanged at $1.27 vs. the dollar. The spot gold price Friday was flat, according to Kitco's gold index.
Second-quarter growth domestic product in the U.S. is expected to be revised down from 2.4% to 1.3% signaling a feeble U.S. recovery. This news comes on top of a stock market which closed below the psychologically important 10,000 level for the first time since July 6. Investors were tentatively buying gold ahead of the number as protection against declining equities. Futures were rising slightly while the physical gold price remained flat.
Gold prices are also waiting for Federal Reserve Chairman Ben Bernanke's speech at 10 a.m. EDT, which will kick off a two day meeting of central bank leaders in Jackson Hole, Wyo. This is the first time Bernanke has spoken since he called the economic outlook "unusually uncertain." Investors will be looking for any signs of further money printing and quantitative easing in light of continuing disappointing economic data.
Two days after the Federal Reserve announced it would reinvest proceeds from maturing mortgage-backed securities into long-term government bonds in mid-August, gold prices surged double digits while the Dow sunk 3.5%. Some analysts are anticipating a similar outcome.
Pumping more liquidity into the market could be seen as a sign of desperation and raise the threat of inflation. Although inflation is currently low -- the core consumer price index rose just 0.1% in July -- future money printing will debase the U.S. dollar and make gold even more appealing as a form of currency.
Just because investors want reassurance from Ben Bernanke doesn't mean they will get it. Jeffrey Christian, managing director of the CPM group, says he doesn't "think Ben Bernanke will be able to say anything that will appease the investment community."
With a dissatisfied Wall Street and gold prices up $9 for the week, Christian expects even more strength from the precious metal. "The fact that gold has gotten over $1,240 and is showing some stability there makes us think that the price could go up further and possibly even to $1,260 or so next week going into the Labor Day weekend," he said.
