Gold and Silver New Prices June 21 2011

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Gold and Silver New Prices June 21 2011

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Gold (-GC) for August delivery was adding $4.50 at $1,546.50 an ounce at the Comex division of the New York Mercantile Exchange. Gold futures have traded as high as $1,549 and as low as $1,539.30, while the spot gold price was last adding $5.80, according to Kitco's gold index.

Silver (-SI) prices were adding 38 cents to $36.45 an ounce while the U.S. dollar index was down 0.38% at $74.70 and the euro was slightly higher.

Gold prices have been biding time, yet to break through and hold the $1,550 level but staying firmly over the $1,500 mark. Jeff Clark, Casey Research's senior precious metals editor, says that gold's strength is due to a lack of a correction rather than fundamental support. "I don't think it's indicative of something bad, but a correction has to come," says Clark.

According to Clark, the biggest decline in the last year in gold has been 6.2%, while "the average correction since the bull market began is about 12%" for assets like gold that gained more than 5% in the sustained rally. A 12% correction from gold's record close of $1,557 back on May 2nd would take prices to $1,363 an ounce.

"There is enough reason to buy gold right now that it is not giving it room to correct," says Clarck, citing Europe's debt crisis and the U.S. debate over whether or not to raise the debt ceiling or default come August 2nd. "As long as those things continue to happen," prices will be supported. On the flip side, Clark speculates that the reason prices aren't hitting highs is because they are already pricing in the end of the Federal Reserve's $600 billion bond buying program, commonly called QE2.

While gold prices flat-line, physical buyers have been on the move. According to a press release on PRLog from Albanian Minerals, a mining and trading company, India imported a record $8.96 billion of gold and silver bullion in May 2011, up 500% from April and up 222% compared with a year ago. Inflation in India was 9.06% in May despite several central bank interest-rate hikes.