Gold rallied to a intraday record Tuesday as the dollar slid to a 14-month low and investors remained concerned about the threat of inflation.
December gold was up $6.30 to $1,063 an ounce after climbing to a high of $1,069.70 earlier in the session. That topped the previous intraday record of $1,062.70 an ounce on Oct. 8.
Gold has been on a record-breaking run since prices rose firmly above $1,000 an ounce last month. Many analysts expect the rally to continue into next year.
«We’ve had a weakening dollar today which has definitely been supportive of gold prices,» said Carlos Sanchez, a precious metals analyst at New York-based CPM Group, adding that inflation is «a long-term concern» for many investors.
While prices could «taper off» following the current rally, «overall we still expect prices to head higher next year,» he added.
The market has been supported by speculation that the weak dollar will continue to depreciate as the U.S. budget deficit swells and investors flock to higher yielding currencies.
The dollar index, a measurement against a basket of currencies, was down 0.3% at 75.90 after hitting 75.74 , its lowest since August 2009.
Gold was also being driven higher by bets that inflation will become a problem in the future. While inflation is currently tame, many traders said consumer prices could spike if U.S. policy makers are slow to reverse monetary and fiscal stimulus measures as the economy recovers.
The government is expected to report Thursday that inflation eased in September from the month prior. The Consumer Price Index is forecast to show a rise of 0.2% in September, compared to a 0.4% rate the month before, according to a consensus of economists surveyed by Briefing.com.
Consumer prices excluding volatile food and energy costs, the so-called core CPI, are expected to have risen 0.1%, the same rate of increase as in August.
In addition to the weak dollar and inflation concerns, investors continue to buy gold as a hedge against economic and geo-political uncertainty.
«We still have weak economic conditions, vulnerable financial markets and political concerns,» Sanchez said.
Source: CNNMoney.com.
#1 by Interest rates - Октябрь 21st, 2009 at 10:48
This season the economy has really suffered form the effects of recession. But it is good for those who survived and is still doing well with their business. Almost business establishments today have increased their prices. Even the credit card companies have increased their interest rates but guess what with low and limited loans. Just about every sector of the finance industry is doing everything they can to lower interest rates, well – except credit card companies. The interest rates on the infernal plastic have been rising lately, while card limits have been dropping. Oh, and long time customers aren’t warned about it in advance! National savings rates are going up, as more people put their own money away instead of borrowing to spend, and card companies need to increase revenue. In all fairness, the hike in interest rates seem fair – because a credit card company suit shouldn’t have to wait another week to buy his next Ferrari should he – or should the consumer not be punished to make up for their market follies?