Capital Gold Group Report: Gold Rises Above $925; Oil Hits New Record High; DOW Loses 20% Since October
June 27, 2008
SAN FRANCISCO (MarketWatch) -- Gold futures climbed above $925 an ounce Friday as a new record high in crude oil, persistent weakness in the U.S. dollar and a recent plunge in the U.S. stock market encouraged investment demand for the precious metal, setting prices up for a weekly gain of almost 3%.
Gold for August delivery traded as high as $929 an ounce on the New York Mercantile Exchange, its strongest intraday level since May 27. It was last up $14.20, or 1.6%, at $929.30.
The contract was poised to end the week with an almost 3% gain.
"Gold has continued to remain firm and safe haven demand has reemerged
on decreasing risk appetite," said Mark O'Byrne, executive director at
Gold and Silver Investments Ltd., in a note to clients.
On Thursday, gold futures rallied $32.80 to finish at $915.10 an ounce.
Overall, "fund money seems again to be leaving the imploding equity
markets and heading into commodities, with energy and precious metals
in the lead, while base metals are a distant third as a group," said
Edward Meir, an analyst at MF Global, in a research note.
Crude-oil futures surged to yet another record high on Friday -- this time above $142 a barrel. . .
. . . Gold is likely to regain $1,000 an ounce by the end of 2008 and work higher through 2009-2010, said John Hill, an analyst at Citigroup, in a research note.
Front-month gold futures reached a record of nearly $1,034 in mid-March.
Gold, like crude oil, has been boosted by persistent weakness in the
U.S. dollar. On Thursday, it broke through a trading range barrier it
had been stuck in since late May and many analysts predict that prices
will soon return to record levels.
Dollar Dance
The greenback dipped lower after a report showing a measure of
inflation came in lower than forecast, reducing speculation that the
Federal Reserve will have reason to raise interest rates this year.
The dollar index (DXY)
which tracks the performance of the U.S. currency against other major
counterparts, was at 72.43 compared with 72.48 in late North American
trading Thursday.
With the Federal Reserve leaving its key interest rate unchanged at 2%,
market watchers say this increases gold's value as a hedge against
inflation.
On Wall Street, U.S. stocks struggled to recover from Thursday's plunge, when the Dow Jones Industrial Average (DJIA) skidded nearly 400 points.
As July 3 approaches, the European Central Bank is "expected to do that which the Fed currently won't," said Jon Nadler, a senior analyst at Kitco Bullion Dealers, implying that the ECB will soon rate interest rates.
As July 3 approaches, the European Central Bank is "expected to do that which the Fed currently won't," said Jon Nadler, a senior analyst at Kitco Bullion Dealers, implying that the ECB will soon rate interest rates.
"The dollar continues
to have problems on the index and against the euro," he said in a note
to clients. "The footprint of momentum hedge funds is wide and deep in
these markets and the massive amount of money being tossed around
simply bends various commodities out of any recognizable shape."
Among other metals
traded on Nymex, September silver gained 36 cents to $17.58 an ounce.
It was ready to end the week 0.4% higher. September copper rose 4.5
cents to $3.87 a pound -- trading 1% higher for the week.
Platinum bucked the
trend in the metals sector. July platinum fell $15.80 to $2,053 an
ounce. September palladium edged down $9.50 to $470.30 an ounce.
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