Capital Gold Group Report: WEAK DOLLAR PUSHES GOLD TO RECORD $970 AN OUNCE
NEW YORK (AP) -- Gold prices trekked higher Thursday, touching a record $970 an ounce as an inflationary combination of high oil prices and a falling dollar pointed investors to the relative safety of precious metals.
Other commodities traded mixed, with silver extending its highest gains since 1980 and wheat futures retreating further from record territory.
Soaring oil prices, a weak dollar and growing worries that the U.S. economy is sliding into a recession have fed investor appetite for gold, which traditionally is seen as a safe haven from inflation and economic uncertainty because it's known for holding its value. Gold rose nearly 32 percent in 2007 and has gained more than 13 percent so far this year.
Also weighing on investors were comments Thursday by Federal Reserve Chairman Ben Bernanke, who told Congress in a second day of testimony that rising inflation was complicating the central bank's job. Bernanke hued to his message that the Fed stands ready to lower its benchmark interest rate to boost the economy, putting further pressure on the dollar and boosting the allure of precious metals.
"You have an almost perfect storm for a bull market in precious metals," said Michael Gross, analyst with OptionSellers.com. "Bernanke's on television and he's pretty much saying the Fed is going to continue to cut rates, and that's really pressuring the dollar and fueling the bullish fire for gold and silver."
Lower interest rates can boost the economy but tend to depress the dollar, encouraging investors to shift funds into hard assets like precious metals and other commodities.
Gold for April delivery added $5.70 to fetch $966.70 an ounce on the New York Mercantile Exchange, after earlier touching an all-time high of $970 an ounce.
Other precious metals also rose. Silver for March delivery added 49 cents to $19.70 an ounce after rising to a 28-year high of $19.845. Nymex copper surged to a record $3.8965 a pound before easing back to $3.87 a pound, still up 3.2 cents.
The dollar's steep decline against the 15-nation euro has been a major driver behind gold's advance from less than $650 an ounce in January 2007. The dollar traded lower Thursday versus the euro, which fetched $1.5197.
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