Gold Bounces as Euro Hits 2009 High, But "No Strong Investment" Despite US Hyper-Inflation Fears

THE PRICE OF WHOLESALE GOLD bounced in London on Tuesday morning, reaching $983 an ounce for Dollar investors and recovering from near 5-week lows versus the British Pound.

The Gold Price in Euros held steady at €689 as the single currency also leapt, jumping to new 2009 highs against the Dollar above $1.4270.

"Upside for gold could be limited today," reckons Walter de Wet at Standard Bank in a note. "There were fairly large volumes of physical gold selling [on Monday] when the price moved above $980."

But with US Treasury bond prices down more than 5% for the year to date, and "while higher yields increase the cost of holding gold in the longer run," de Wet adds, "right now it signals reduced investment appetite for exposure to the US and a weaker Dollar."

"Don't be complacent and think there isn't any alternative for China to buy your bills and bonds," warned former central-bank advisor Yu Yongding - scheduled to meet US Treasury secretary Tim Geithner in Beijing today - in an interview on Monday.

"The Euro is an alternative. And there are lots of raw materials we can still buy."

According to data from Bloomberg , foreign investment in US Treasury debt rose nearly $69 billion in May, with strong foreign demand for last week's auction of $101bn in new bonds.

The Federal Reserve will continue its $300bn "quantitative easing" of longer-term interest rates by purchasing 10- and 2-year bonds in the open market tomorrow and Thursday.

"Most of the ongoing rally in the precious metal is more driven by a stark weakness in the US Dollar than the risk averse buying we saw last winter," agrees Andrey Kryuchenkov at VTB Capital in London, quoted by The Telegraph.

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US Stocks Higher On Housing Data; Financials Stay Lower

Stocks built on Monday's rally in a broad push higher Tuesday as investors digested encouraging housing data, though a rising supply of shares in several Wall Street bellwethers damped financials.

Major indexes seesawed between gains and losses through the day, but major milestones for the year remained in sight. The Dow Jones Industrial Average was recently up 30 points, or 0.4%, to 8751. At its morning high, the blue-chip measure rose about 66 points, almost 11 points above its 2008 close of 8776.39.

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Credit and Credibility , The Credit Crunch

With the economy in a downward spiral, more and more people are taking advantage of credit card offers to make ends meet, but are the credit card companies actually taking advantage of their customers? In the week in which federal regulators adopted sweeping new rules for the credit card industry, NOW meets families struggling to pay off their credit card debt. Such debt has become significantly larger thanks to questionable industry practices like doubling and tripling interest rates, increasing fees and penalties, and shrinking credit limits. We meet people like Andrew Spurlock and his wife Michelle, who are raising three children while watching the interest rates and fees on their credit cards skyrocket. Michelle was horrified when her interest rate jumped from seven percent to 30 percent from one day to the next, despite claiming she always paid her monthly minimum. Michelle and her husband are fighting off financial ruin as they struggle to pay off their debt. Harvard Professor Elizabeth Warren, an expert on debt and the middle class, says credit card companies are deceiving customers in order to maximize profits. "You would think that if you upheld your end of the contract that the contract would be binding. But in the case of credit cards, you would be wrong," Warren, tells NOW. This week, NOW takes a hard look at the small print in credit card offers, and at Congressional legislation aimed at regulating the industry. Are you getting the credit you deserve?