Friday, Aug 6th, 2010
Strongest rally for precious metal in nine months
Gold prices have surged to to three week highs as the stock market and the U.S. economy continue to flounder, leaving investors seeking a safe haven in hard assets.
Gold futures for December increased by around 1 percent, $9.90 to $1,209.20 this morning on the Comex in New York.
The rise constitutes the eighth day straight gain for gold, the longest rally since last November, reaching its highest peak since July 15th.
The run comes in the wake of a decline for the dollar, which today hit a three-month low against the euro following a payroll report that signaled the U.S. will be slow in recouping jobs lost in the recession.
The greenback was also down 0.6 percent against a basket of six currencies. U.S. stock index futures also fell sharply.
The following graph illustrates
“The dollar is getting odious compared to the euro, which was the rankest thing around in the first half of this year,” Frank McGhee, head dealer at Integrated Brokerage Services LLC told Bloomberg.
“If the Fed has to do something more accommodative to spur the economy, you’re going to see an explosive rally in gold.” he added.
Ole Hansen, senior manager at Saxo Bank, told Reuters that the payroll data had proved “a bad report that could bring forward additional monetary expansion, which can be dollar negative and therefore supportive for gold.”
Other investors see gold re-establishing its typical relationship with the dollar after both bounced higher in recent months on the back of risk aversion.
“We saw that negative correlation shift to a positive correlation between the dollar and gold since January, up until the last few weeks,” said RBS analyst Daniel Major.
“Gold is going to fall back more into its traditional relationship with the dollar,” he said.
Silver prices also rose today in line with gold to $18.45 versus $18.31.
With the current economic conditions you cannot afford to be uninformed. Bob Chapman’s International Forecaster is the foremost in financial and economic newsletters. Published twice a month by surface mail or 6-8 times a month by e-mail, you won’t want to miss a single issue of this newsletter. For a limited time Midas Resources and The Alex Jones Show are offering to you a chance to get a FREE one year subscription to the International Forecaster!
When you purchase the Gold Franc containing a fifth ounce of gold, at an exceptional price from Midas Resources, you will also receive a full one year subscription of the International Forecaster ( $159.95 value) FREE!
Call Midas Resources to get this special limited offer today at 1-800-686-2237 and tell them you got the email offer from Alex Jones or purchase it now by visiting the GCN website.
Also, Ultra 12 is back by popular demand! Get the ultimate source of energy at 40% off now!