American Bullion -- Gold Price Up In Late Trading

Tuesday, March 09, 2010 at 12:00pm

March 9, 2010 Los Angeles – The price of Gold was lower in early trading Tuesday, pressured by a higher U.S. dollar, but Gold prices turned up in late trading. Gold bullion prices lost ground on Tuesday in pounds, euro and Swiss francs but still remain near record highs in these currencies. Astute investors are buying Gold coins after Fitch Ratings said their BBB+ rating of Greece was appropriate. The low rating creates a major problem for Greece because the ECB is restricted from accepting sovereign debt as collateral for loans to commercial banks unless the debt is rated A- or higher.

Brian Coulton, the head of Europe, Middle East and Africa sovereign ratings at Fitch Ratings, rekindled fears of a possible sovereign default within the European Union today when he said if there is a default it wouldn't necessarily mean the end of the euro zone. Coulton told Reuters at a conference in London on Tuesday, “The defaulting sovereign would not necessarily need to leave the euro zone, and the bloc may provide a safe harbor.”

Barclays Capital survey revealed on Tuesday that institutional investors, looking for higher returns, expect to raise their exposure to commodities this year.  "This was a strong vote of confidence in commodity assets," Barclays said in a note. "Despite lingering concerns about the fallout from the financial crisis, investors expect commodity returns to be robust over the next five years and plan to continue raising their exposure to the asset class to new highs."

Martin Murenbeeld of Dundee Wealth Economics, a panelist at PDAC2010 in Toronto on Sunday said, “When central banks buy government debt, they are putting money into the system, and in all of our analysis of gold, that’s what makes gold prices go up more than anything else.” This is exactly the scenario facing investors today. Investing in physical Gold remains the safest way to invest in precious metals.