Gold prices break new record as weak dollar, fears of recession fuel demand for safe-haven investments.
Gold futures rose above $900 an ounce for the first time Friday, as high oil prices, a weak dollar and fears of a U.S. recession led uneasy investors to keep buying the precious metal.
An ounce of gold for February delivery on the New York Mercantile Exchange jumped $6.50 to $900.1 in morning trading, an all-time high and a psychologically important milestone. Gold later slipped to $898.70 an ounce but remained in record territory.
It's a reflection of market sentiment: Gold is a hedge against uncertainty and right now it's the best bet, said Carlos Sanchez, a precious metals analyst at CPM Group in New York. None of the other investment options look that great and gold does.
Still, when adjusted for inflation, gold remains well below its all-time high. An ounce of gold at $875 in 1980 would be worth $2,115 to $2,200 today.
Gold has seen a meteoric rise the past year -- rising 32 percent in 2007 -- boosted by rising prices for oil and other commodities and also by the falling U.S. dollar. Those trends have increased the metal's appeal as a haven; gold is also seen as a safe investment in times of political and economic uncertainty around the world.
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Friday, January 11, 2008
Gold tops $900 an ounce
Wednesday, November 7, 2007
Gold settles at record high
Investors seek safe haven as the dollar falls on a report that China may diversify its exchange reserves, but one analyst sees rally fading.
Gold settled at a record high of $833.50 an ounce in New York trading Wednesday as the dollar's decline and oil's record surge caused inflation-wary investors to seek stability in precious metals.
The previous high was $825.50, set Jan. 21, 1980, or $2,128.09, adjusted for inflation, according to the Minneapolis Fed Calculator.
Trading in gold offers investors a hedge against stock market volatility because it is a store of value, compared to stocks, which are subject to a variety of unpredictable economic factors.
The euro hit a fresh record against the dollar, rising to $1.4729 before retreating. The dollar was dragged down by a report that a Chinese political figure said that Beijing should favor the euro, not the dollar, in diversifying its exchange reserves valued at $1.43 trillion.
Meanwhile, oil hit a new intraday record at $98.62 a barrel early Wednesday ahead of the government's weekly inventory report that was expected to show a 1.6-million barrel drop in crude stockpiles. Oil's drive to the $100-a-barrel mark slowed when it turned out that inventories were down slightly less than expected. Still, oil has surged more than 20 percent in the past month.
In addition to the dollar's decline and oil's rally, the ongoing fallout of the credit crisis has investors flocking to the relative safety of gold.
But one analyst wasn't so sure the metal will stay in record territory.
Safe-haven buying accounts for only one third of gold consumption, according to Jon Nadler of Kitco Bullion Dealers. He says most gold is used to make jewelry, with the biggest demand coming from India and the United States.
If consumers in India and the U.S. deem the price of gold unacceptable you will begin to see a big shift, Nadler said.
Sunday, November 4, 2007
Before Diwali, gold may cross Rs 10,500/10gm!
The gold run is set to continue in India. According to bullion analysts, the prices of the yellow metal is likely to hit Rs 10,500 this week.
The reason is gold’s status as the most profitable investment avenue in commodities and strong fundamental support amid rising tensions in southeast Asia.
Analysts said the metal will move in the range of $785-754 in the near term in London. By December-end, gold is likely to touch Rs 12,000 per 10 grams in India and $971 in London.
According to World Gold Council, a rise of Rs 100-200 is unlikely to change the market sentiment, especially during the festive season.
Pure gold hit the psychological barrier of Rs 10,000 per 10 grams on Friday for the first time in 15 months, but profit booking pulled down the price to Rs 9965 per 10 grams towards the end of the day.
Again standard gold crossed the benchmark but looked down to settle the day at Rs 9915 per 10 grams. The two benchmark varieties of gold gained Rs 425 each within a week.
Following the international trend, gold Futures for December delivery on MCX perked up to Rs 9846 per 10 grams on October 19 as against Rs 7921 per 10 grams on October 12.
In London, gold jumped substantially to $768.25 an ounce from $748.5 in the last one week. However, the metal slipped from the highest in 27 years after crude oil declined from a record and the dollar rebounded. This reduced the metal’s appeal as a hedge against inflation.
Gold retreated in London on Friday after climbing to $776.90 an ounce, the highest since 1980, while crude oil fell from the highest ever benchmark level of $90.07 a barrel. The dollar rose after touching a record $1.4319 against the Euro. Rupee closed slightly lower at 39.72 against dollar after hitting the record intra-day low at 39.81. The currency opened at 39.70.
Gold Futures for December delivery fell 30 cents to $768.40 an ounce on the exchange division of the New York Mercantile Exchange.
Gold had climbed to the highest for a most-active contract since January 22, 1980, the day after the price reached a record $873.
Friday, September 28, 2007
Gold prices: Nowhere to go but up
The dollar is declining and inflation is lying in wait. Market conditions are waving red in the face of gold bulls.
So far this year, gold prices are up about 22 percent to nearly $750 an ounce - helped by the declining dollar and growing interest from institutional investors.
And given a confluence of factors, including heightened seasonal demand, analysts believe that prices for the precious metal will move higher still and are poised to shatter its all-time record.
Historically, gold has been considered a safe-haven for investors jittery about inflation or the economy.
With skittish investors diversifying their portfolios with commodities, demand for gold has shot up. During the summer's market meltdown, prices remained modestly higher compared to the start of the year before moving higher in recent weeks. Just last week, gold hit $744.80 an ounce - its highest level in 27 years.
Many analysts say the biggest driving factor has been the weakening dollar. A weaker greenback makes gold, which is priced in dollars, more attractive to buyers outside the United States.
At the same time, worries about inflation have also stoked gold prices, according to Jon Nadler, an analyst with Kitco.com.
Indeed, gold typically attracts investors looking for a hedge against inflation. That factor has become especially important now with oil prices near record highs and after the Federal Reserve cut interest rates last week for the first time in four years.
And gold could find even more support at the consumer level. Typically, the period from September through year's end sees demand for gold climb in the United States amid the holiday shopping season. Demand is also high in India, the world's largest consumer of gold, because the next few months are a popular time for weddings and mark the celebration of the Hindu new year.
Of course, if interest by institutional investors or hedge funds wanes or consumer demand for jewelry slackens amid weakened consumer spending, gold prices could move right back down, according to experts.
How high?
By some analysts' estimates, gold prices are headed for $750 an ounce by the end of the year.
Peter Spina, an analyst with GoldSeek.com, speculated the price could even top its all-time high of $850, set in January 1980.
