MW: Gold futures rally to new record high as dollar falls
FRANKFURT (MarketWatch) -- Gold futures soared to a new record high just below $1,050 an ounce on Wednesday, as the dollar fell against the yen, continuing to lure buyers into the gold market.
Front-month gold for October delivery surged to an intraday high of $1,048.20 an ounce in electronic trading on Globex. This is a new record high for front-month gold futures.
The October contract was last up $9.50, or 0.9%, to $1,048.10 an ounce.
Gold for December delivery, the most actively traded contract, hit an intraday high of $1,049.70 an ounce, surpassing its record high set in the previous session. December gold futures have risen 18% year to date.
The December contract was up $8.30, or 0.8%, to $1,048 an ounce in recent trading.
"The prime driver of the recent rally in the gold price, pushing it above $1,000 an ounce, was the weakening of the U.S. dollar," wrote analysts at Nomura International in a note to clients.
The dollar fell 0.6% against the Japanese yen and was generally weaker against most other major currencies.
The dollar index (DXY 76.20, -0.14, -0.18%) , which tracks the performance of the greenback against a basket of major currencies, edged down 0.2% to 76.209.
There is a very strong inverse relationship between the U.S. dollar and gold prices. When the dollar falls, gold prices tend to rise.
On Tuesday, December gold futures finished at a new record closing level, after hitting a record intraday high. The gains came as the dollar slumped on a report suggesting the end of dollar-based oil trading and as Australia hiked interest rates.
Credit Suisse launched on Tuesday its first physically-backed gold-exchange-traded fund. The new Gold Xmtch ETF, which is listed on the SIX Swiss Exchange, is in U.S. dollars and can be hedged in Swiss francs and euros. This fund invests in physical gold without using derivative instruments.
Also on Globex, December silver futures rose 21 cents, or 1.2%, to $17.51 an ounce. Silver prices have rallied 55% year to date.
Harmony Gold raised to buy at Nomura
Nomura International upgraded on Wednesday Harmony Gold Mining Company Ltd. (HMY 11.75, +0.98, +9.10%) (ZA:HAR 8,601, +601.00, +7.51%) to buy from neutral, saying it has the highest leverage to the appreciation of gold and it is the best value among South African gold equities.
"While we generally agree that in the long run physical gold beats equities, we believe Harmony Gold and Polyus Gold offer attractive buying opportunities for the next 12 months," wrote analysts at Nomura. They reiterated their buy recommendation on Moscow-based Polyus Gold (OPYG.Y 24.20, +1.00, +4.31%) .
Nomura also downgraded both AngloGold Ashanti Ltd. (AU 44.79, +3.58, +8.69%) (ZA:ANG 32,361, +1,842, +6.04%) and Gold Fields (GFI 14.89, +0.92, +6.59%) (ZA:GFI 11,058, +758.00, +7.36%) to neutral from buy, citing the recent rallies in the two South Africa-based companies.
The bank also initiated coverage of Russian gold and silver producer Polymetal (POYM.Y 8.00, 0.00, 0.00%) with a neutral recommendation.
Polyus Gold and Polymetal are both listed on the London Stock Exchange as well as on the RTS and Micex exchanges in Moscow.
