Gold surges to a record high
By Ben Rooney
The precious metal jumps to settle at an
all-time high as the U.S. dollar declines.
Gold jumped to an all-time high Wednesday as the
dollar depreciated, fueling demand for the metal
as a hedge against the anemic greenback.
December gold climbed $12.10 to settle at a
record high of $1,114.60 an ounce after hitting
a record trading high of $1,118.60 an ounce
earlier in the session.
"Overall we're still seeing strong investor
interest," said Carlos Sanchez, precious metals
analyst at CPM Group, adding that gold's recent
rally has attracted many "short-term market
Prices surged early in the session as the dollar
weakened on expectations that U.S. interest
rates will remain low for an extended period of
Gold pared gains later in the session as the
dollar recovered some ground but remained near a
15-month low against rival currencies.
The dollar index (DXY), which gauges the
greenback's value against a basket of
currencies, was up 0.1% to 75.11.
Despite the dollar's modest rebound, the
currency market remains focused on the bleak
outlook for the U.S. currency.
"The dollar continues to weaken," Sanchez said.
"That's because of concerns over loose monetary
policy and fiscal stimulus that is increasing
money flows into financial market and the
A softer dollar makes commodities that are
priced in dollars such as gold cheaper for
investors using other currencies.
The weak greenback has also raised concerns
among many foreign central banks, since the
dollar is the traditional global reserve
currency. As a result, some overseas monetary
policy makers are said to be looking for ways to
diversify away from the dollar.
Last week, the Indian central bank bought 200
metric tons of gold from the International
Monetary Fund. That raised bets that more
central banks could increase their holdings of
the precious metal as an alternative to the
Gold prices are also being supported by concerns
about inflation. While consumer prices remain
subdued, some traders say U.S. monetary and
fiscal stimulus policies could spur a bout of
inflation in the future.
Tangible assets like gold tend to hold value
better than other types of investments when
inflation is a problem.