Gold futures continue to surge
By Polya Lesova
Metal earlier touches
new record high of $967.70 an ounce
Gold futures rose sharply Wednesday, touching a
record $967.70 an ounce, propelled by the euro's
surge to a new high against the U.S. dollar.
Gold for April delivery rose $12.10, or 1.3%, to
end at $961.0 an ounce on the New York
Mercantile Exchange. Earlier, the contract hit a
record $967.70 an ounce.
"We're definitely seeing the rally spurred by
dollar weakness and a continued strong bid into
all things commodity," said Zachary Oxman,
senior trader at Wisdom Financial.
"Funds and speculators alike seem to be
scrambling to get long commodities, gold
especially," Oxman said.
Weakness in the U.S. dollar boosted gold's
investment appeal. Gold, like many commodities,
is denominated in dollars, and a lower U.S.
currency makes it more affordable in other
The dollar was battered across the board,
falling to a new record low of $1.5133 against
the euro after downbeat durable-goods data and
hints from U.S. Federal Reserve Chairman Ben
Bernanke that more interest rate cuts are on the
way. See Currencies.
The Commerce Department said new orders for
durable goods fell 5.3% in January after a burst
of orders in December, another sign that the
economy is slowing. Economists surveyed by
MarketWatch had anticipated a 5.1% drop. See
After the data, Bernanke told Congress Wednesday
that the central bank will remain on the course
for additional rate cuts at least in the near
term, and that downside risks to growth remain
the key focus of monetary policy. See The Fed.
"Today's record lows in the U.S. dollar, record
highs in gold and record highs on oil mark a key
tipping point in currency markets, as traders
further downgrade the U.S. currency to a
low-yielding asset," said Ashraf Laidi, chief
foreign-exchange strategist at CMC Markets US,
in a note.
"The greenback is being damaged across the board
on the notion that the ultra-low interest rates
at the expense of escalating inflation is the
only way forward to prevent further spreading of
the U.S. recession," Laidi said.
On Tuesday, gold futures gained $8.40. Gold
futures fell Monday after a senior Treasury
official said the U.S. supports the proposed
sale of part of the gold reserves held by the
"Despite the increased likelihood of
[International Monetary Fund] sales, it seems
investors are more concerned with the threat
that inflation/recession poses, and with two of
gold's key driving forces -- euro/dollar and oil
-- now in uncharted territory themselves, it
seems inevitable that gold will challenge new
highs closer to $1,000 an ounce," said James
Moore, an analyst at TheBullionDesk.com, in a
Crude-oil futures fell more than $1 to end below
$100 a barrel, after hitting a record high above
$102 overnight, as government data showed a
bigger-than-expected buildup in U.S. crude
inventories. See Futures Movers.
In a stagflationary environment, "commodities do
quite well, since participants turn to hard
assets to protect themselves against eroding
purchasing power," said Edward Meir, an analyst
at MF Global, in a research note. "However,
history also shows that even commodities
eventually suffer when the picture turns from
slow growth to negative growth."
"Until we get there, however, it seems to be
'all systems go' for a variety of commodities,
from wheat to copper to oil and to gold," Meir
Also on Nymex, March silver rose 49 cents to end
at $19.21 an ounce, while April platinum edged
down $3.60 to $2,152.30 an ounce.
March palladium gained $19.20 to end at $555.55
an ounce and March copper rose 6 cents to $3.84
Gold warehouse inventories declined by 129,965
troy ounces to stand at 7.1 million troy ounces
as of late Tuesday, according to Nymex data.
Silver stockpiles rose by 598,984 troy ounces to
stand at 134.8 million troy ounces, while copper
supplies fell by 338 short tons to stand at
13,551 short tons.