Gold breaches $1000 level for the second time this year

Precious-Gold succeeded in breaching the $1000 for the second time since February 20 on economic woes and inflation concerns.

The previous day, gold added $2.80 or 0.28% to close at $994.75 an ounce. Gold prices were setin London on Monday at $993.00 an ounce inclining from $992.75 an ounce during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, stood at 1,077.63 metric tons on September 7.

Gold finally managed today to breach the $1000 level after several attempts over the past few days. The metal breached all the strong resistances at $884 then $996 which opened the way for surpassing the $1000 psychological barrier that wasn't touched since six months. The metal needs to stay above $1000 for few days to continue rising. However, prices are expected to face downside pressure on profit taking especially as it became overbought. Gold will face the next resistance at $1012 then $1015.

The shiny metal advanced more than 12% this year as it played a crucial role as both a safe harbor and a hedge against inflation. The very high gold prices reflect that there is uncertainly and worries in markets with regard economic recovery despite the ongoing improvement witnessed recently by major economies. World economies are only showing progress due to the stimulus packages introduced by governments and central banks. The G-20 in their meeting last week chose to continue their stimulus plans which show that world economies still need help. Also, the volatility in data and rising unemployment and deflation risks are raising concerns recovery may falter.

On the other hand, global economies cut their key interest rate to historical levels and pumped money in markets to support it with liquidity. World economies have set aside $2 trillion to be spent in order to revive their economies and rekindle growth, therefore boosting demand on gold as an inflation hedge. Besides, oil prices hit this monthits highest level in 10 months, and rose more than 54% this year.

As for the U.S. dollar, it slipped for the third day to 77.67 from the openingat 78.02, as seen by the dollar index which tracks the dollar's movements versus six major currencies. The vulnerable dollar increased the appeal of bullions as better investment and encouraged buying by other currencies since the metal became cheaper. The dollar index lost more than 4% this year and retreated 14.2% against the euro since March, and it is expected to face more pressure with improvement in economic conditions which reduces demand on the yen and dollar as refuges.

Spot gold is now at $1005.85 an ounce recording a high of $1007.25 and a low of $994.02. Among other precious metals, platinum edged up to $1278.50 from $1268.00at Monday's closing; palladium surged to $292.00 from $291.50; and silver surged to $16.74, the highest in 13 months, from $16.42.