After a forecast was released calling for the European economy to shrink this raised, gold prices jumped higher. This report raised questions about not only Europe's economic growth, but economic growth on a global level. This is the third straight day of gains for the precious metal.
By Associated Press
Updated: Thursday, February 23, 1:46 PM
Gold prices rose Thursday after a forecast calling for the European economy to shrink this year raised questions about global economic growth.
Gold for April delivery rose $15 to finish at $1,786.30 an ounce, its third straight day of gains. Investors see gold as a relatively stable asset, so they buy it as a hedge against potential losses in other investments.
The European Commission predicted that the overall economy in countries that use the euro will shrink 0.3 percent this year. In November the commission predicted 0.5 percent growth.
The report caused concerns that cost-cutting measures in countries like Greece could be slowing the region’s growth. Those concerns, in turn, are leading to speculation that weakness in Europe’s economy could weigh on global growth.
Gold also benefited from weakness in the dollar. Since commodities are priced in dollars, a weaker dollar makes them cheaper for traders who use other currencies.
Country Hedging LLC analyst Sterling Smith said he expects gold to continue to rise as European leaders take steps to try to stimulate their economy. He and other analysts are speculating that gold could top $1,800 an ounce in the near future.
In March metals contracts, silver rose $1.302 to finish at $35.556 per ounce, copper fell 2.75 cents to $3.806 per pound and palladium increased 65 cents to $718.40 per ounce. April platinum rose $2.20 to end at $1,723 an ounce.
Oil prices continued to climb over concerns about supplies caused by a dispute over Iran’s nuclear energy program. The European Union and the United States are using sanctions against Iran because they fear the country is developing a nuclear weapon. Iran denies the charge.
Benchmark oil rose $1.55 to end at $107.83 per barrel on the New York Mercantile Exchange. Heating oil increased 2.5 cents to $3.29 per gallon, gasoline futures rose 2.5 cents to $3.288 per gallon and natural gas futures fell 2.2 cents to $2.621 per 1,000 cubic feet.
In March agriculture contracts, wheat prices fell 4.75 cents to finish at $6.41 per bushel, corn rose 1.25 cents to $6.395 per bushel and soybeans ended up 4.5 cents at $12.7675 per bushel.
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