American Bullion -- Physical Gold A Safe Investment

Wednesday, June 16, 2010 at 06:48am

June 16, 2010, Los Angeles – Gold bullion prices rallied as the euro rose to a two week high against the dollar on Tuesday. A stronger euro and weaker dollar have benefitted the price of gold recently.

Sovereign debt issues have altered Gold's relationship with the euro this year by weakening the single currency while increasing Gold bullion's safe haven appeal.

Federal Reserve officials are expected to trim forecasts for U.S. economic growth when they meet next week to set interest rates. Former Fed researcher, John Ryding, said the new estimates are likely to reinforce the Fed’s promise to keep interest rates at a very low level for an “extended period.”

“If you were a policy maker and you were looking at the U.S. picture, you’d say that the downside risks have increased relative to where you thought they were six weeks ago,” said Ryding, chief economist at RDQ Economics LLC in New York.

Ryding's prediction is that the Fed won’t raise its benchmark rate from close to zero until at least March 2011. Analysts say the downgrade of Greek government debt ratings to junk was not unexpected, but it reminded investors that the European debt crisis is far from over.

"We have got a lot of potential market disruption risk this year -- sovereign risk from Europe, fiscal tightening, at some point monetary tightening, and regulatory risk as well," said Michael Lewis, head of commodity research at Deutsche Bank. "There are a number of external events that could be quite positive for gold."

"The vicious combination of poor and deteriorating public finances, anemic economic growth and sovereign debt and currency concerns should lead to continuing safe haven demand for gold," wrote analysts at Goldcore.com. Investors continue to purchase Gold bullion as an alternative to currencies since physical Gold remains one of the safest investments.