Gold Explodes on Fears of Double Dip Recession
The debt deal is done…but then why are Gold (NYSE:GLD) prices are still flying higher? The yellow metal has gained 1.3% in trades Tuesday, pushing prices for December futures to a new nominal record of $1,643.40 per ounce. President Obama signed the debt ceiling increase into law this afternoon, yet investors continue to flock to the safe haven of gold as the focus returns to the reality of a languishing national economy. “You have a new element on the table: [the prospect of return to] recession in the U.S.,” said Adam Klopfenstein, with MF Global in Chicago. “We have problems with the deficit, problems with growth, and problems overseas.” Second quarter GDP limped in at 1.3% last week, manufacturing data is the weakest since 2008, and consumer spending dropped by -0.2% in June, its first contraction in two years. Add these factors to a weak expected jobs report (Friday) that could see unemployment spike higher, and you have the grounds for a disastrous economic outcome in the second half of the year.
Silver (NYSE:SLV) also jumped 2.31% in trading today to $40.27 per ounce on macroeconomic worries, while Copper has inched lower to $4.4o a pound.