Gold Futures Rose Extends Rally to Record as Dollar Slumps; Silver Climbs
Australia’s monetary-policy makers unexpectedly raised borrowing costs on Oct. 6, triggering gold’s record-setting rally. The European Central Bank kept its main refinancing rate at 1 percent today.Gold futures rose to a record for the third straight day as the dollar’s slump boosted demand for the metal as a store of value. Silver climbed to the highest price since July 2008.Crude-oil futures jumped as much as 4.3 percent in New York. The price has climbed 61 percent this year. Some investors watch energy costs to forecast inflation.Gold reached $1,062.70 an ounce, the highest ever. The metal is up 19 percent this year, heading for the ninth straight annual gain, while the dollar has dropped 6.6 percent against a basket of six major currencies. Bullion probably will top $2,000 in the next decade, investor Jim Rogers said yesterday in a Bloomberg Television interview.
“People are interested in gold now,” said Ron Goodis, an Equidex Brokerage Group Inc. director of retail trading. “They see the government print money, they’re concerned about the dollar’s value and they’re anticipating inflation. Gold is driving higher on this wall of worry.”
Gold futures for December delivery jumped $11.90, or 1.1 percent, to $1,056.30 an ounce on the New York Mercantile Exchange’s Comex division. Bullion for immediately delivery touched a record $1,061.55 in London and traded at $1,054.10 an ounce, up $9.90, or 0.9 percent, at 8 p.m. local time.
Australia’s monetary-policy makers unexpectedly raised borrowing costs on Oct. 6, triggering gold’s record-setting rally. The European Central Bank kept its main refinancing rate at 1 percent today. The U.S. benchmark target rate has been at zero to 0.25 percent since December.
“This is a do-or-die day for the dollar,” said Matt Zeman, a LaSalle Futures Group metals trader in Chicago. “As risk appetite returns, people are going to start chasing higher yields. A break lower for the dollar and gold could skyrocket.”
Energy Costs Climb
Crude-oil futures jumped as much as 4.3 percent in New York. The price has climbed 61 percent this year. Some investors watch energy costs to forecast inflation.
“Crude bounced, and it’s as if a light switched on,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
The 14-day relative strength index on gold has been above 70 for two days, a signal that prices may retreat.
“I’m not a buyer of gold up here at $1,050,” Equidex’s Goodis said from Closter, New Jersey. “It’s a time when risk has to be extremely well managed. Gold can be at $1,100 in two weeks or it can drop to $900.”
Silver futures for December delivery rose 31.5 cents, or 1.8 percent, to $17.815 an ounce in New York. Earlier, the metal reached $17.955, the highest for a most-active contract since July 23, 2008.
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