GOLD PRICE NEWS - The gold price continues to trade in a tight range, closing between $1,090 and $1,120 for the past thirteen trading sessions. The price of gold, after posting a 2.1% rise in February and breaking a two-month losing streak, opened the first day of March down $1.20 to $1,115.75 per ounce. The euro and pound weakened versus the U.S. dollar in spite of news over the weekend that European Union governments were close to finalizing a rescue package for Greece. While prospects for a Greek bailout appear to have increased, legendary investor, George Soros, told CNN’s Fareed Zacharia that the euro “may not survive” due to the looming deficit crisis in Greece and its aftershocks.

One of the chief catalysts of the weakness in the gold price over the past three months has the U.S. dollar’s strength relative to the euro. This has led to widespread liquidation in gold and gold stocks. However, while Soros may believe the euro will one day be extinct, his confidence in the bullish path of the gold price is increasing. Soros has built up large positions that give his investment firm leverage to a higher gold price. Soros created a stir amongst gold traders when it was revealed through 13F filings with the SEC in early February that Soros Fund Management increased his bet on a higher gold price.

Soros held 6.2 million shares of the SPDR Gold Trust (GLD) at of the end of 2009 - up from 2.5 million at the end of the third quarter. Gold mining producers, Barrick Gold (ABX), Freeport-McMoRan Copper and Gold (FCX), and Kinross Gold (KGC) were all purchased during the fourth quarter by Soros’ investment fund, illustrating that the billionaire investor has joined other high-profile institutional money managers such as John Paulson in making a big bet on a higher gold price in coming years.

One of the key drivers of the gold price over the past few years has been the U.S. dollar/euro currency cross. Weakness in the euro over the past three months due to the fiscal crisis in Greece and the potential negative implications on the single monetary union have led to selling pressure on the price of gold. With strength in the U.S. dollar making front page news, investors and traders have shed gold-related investments. Such indiscriminate selling could prove to be short-sighted.

Weakness in the euro or any major fiat currency is supportive of a higher gold price. Gold performs well when confidence in currencies and the financial system wanes. While the U.S. dollar may be strengthening versus the euro, leading to an upward move in the widely followed U.S. Dollar Index (DXY), gold remains in an uptrend against all major global currencies. It is hard to imagine that the potential disintegration of the euro can be interpreted as bearish for the gold price given the safe haven flows that could move into gold if confidence in Europe’s single currency continues to dissipate. Gold has slowly been increasing in relevance as a monetary asset and big, institutional money flows have established sizable positions in the gold sector.