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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 11/24/2008 : 19:20:24
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Gold Rises to 5-Week High as Dollar Weakens; Silver Advances
By Pham-Duy Nguyen
Nov. 24 (Bloomberg) -- Gold rose to a five-week high as the dollar weakened, boosting the appeal of the precious metal as an alternative investment. Silver and platinum also gained.
The dollar fell as much as 2.6 percent against a weighted basket of six major currencies. Gold and other metals often move in the opposite direction of the U.S. currency. Gold still is down 2.2 percent this year, while the dollar rallied 12 percent.
“The dollar is getting its teeth kicked in,” said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. “You have big money flowing back into gold. The risk appetite is returning, and the dollar is getting decimated.”
Gold futures for December delivery rose $27.70, or 3.5 percent, to $819.50 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $830.10, the highest since Oct. 16.
Silver futures for March delivery jumped 87.3 cents, or 9.2 percent, to $10.378 an ounce on the Comex.
Platinum futures for January delivery gained $40.70, or 4.9 percent, to $866.40 an ounce on Nymex. Palladium for March delivery rose $16.65, or 9.2 percent, to $196.90 an ounce, the biggest gain since Feb. 19.
The dollar fell after Citigroup Inc. got $306 billion in U.S. government guarantees for troubled assets, reducing demand for the greenback. The collapse of Lehman Brothers Holdings Inc. in September triggered a $700 billion U.S. government bailout for banks.
Dollar Weakness
“Gold is up on the weakness of the dollar,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “The overall impact of what the bailout is going to cost will ultimately become very negative for the dollar. All this money that ran into Treasuries with no yield, and the government still has to go out and borrow money.”
The U.S. Treasury is on course to borrow $1.5 trillion this year. The Federal Reserve cut its benchmark interest rate to 1 percent from 5.25 percent in September 2007.
Since Lehman collapsed, gold has traded as high as $936.30 on Oct. 10 and as low as $681 on Oct. 24. Some investors sold gold to raise cash and cover losses in other markets as the Standard & Poor’s 500 Index dropped 46 percent this year before today. The gauge rebounded as much as 5.2 percent today.
“A rally was overdue because gold was so undervalued,” McGhee said. “As the stock market finds some stability, all the things that were thrown out with the bathwater, like gold, will come back.”
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
Last Updated: November 24, 2008 14:21 EST
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Nickelmeister
Penny Hoarding Member
Canada
588 Posts |
Posted - 11/24/2008 : 21:45:00
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"boosting the appeal of the precious metal as an alternative investment"
I think it's funny that most people consider gold an "alternative" investment. Alternative to what? lol |
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2% dollar drop today.
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