BLBG: Gold Extends Rally to Record as Dollar Slumps; Silver Climbs
Oct. 8 (Bloomberg) -- Gold held near a record, extending this week’s rally, as the dollar’s slump boosted demand for the metal as a store of value. Silver climbed to the highest price since July 2008.
Gold futures reached $1,059.60 an ounce, the highest ever. Before today, the metal gained 18 percent this year, heading for the ninth straight annual gain, while the dollar is down 6.3 percent against a basket of six major currencies. The metal will probably top $2,000 in the next decade, investor Jim Rogers said yesterday in an interview on Bloomberg Television.
“People are interested in gold now,” said Ron Goodis, a director of retail trading at Equidex Brokerage Group Inc. in Closter, New Jersey. “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 rose $6, or 0.6 percent, to $1,050.40 an ounce at 10:44 a.m. on the Comex division of the New York Mercantile Exchange. Prices briefly traded lower.
Australia unexpectedly raised borrowing costs on Oct. 6, triggering gold’s rally to all-time highs. The European Central Bank kept its main refinancing rate at 1 percent today. The U.S. benchmark rate has been zero at 0.25 percent since December.
“This is a do-or-die day for the dollar,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “As risk appetite returns, people are going to start chasing higher yields. A break lower for the dollar and gold could skyrocket.”
The 14-day relative strength index on gold has been above 70 for two days, signaling prices may retreat.
“I’m not a buyer of gold up here at $1,050,” Goodis of Equidex said. “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 23 cents, or 1.3 percent, to $17.73 an ounce. Earlier, the metal reached $17.93, the highest level for a most-active contract since July 31, 2008.
To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net.
