#1 Gold hits six-week high on dollar, safe-haven buying
11-24-2008, 07:28 PM
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- Aug 2005
Gold hits six-week high on dollar, safe-haven buying
-- Gold futures rose for a fourth consecutive session Monday, surging to close at their highest level in nearly six weeks, amid safe-haven buying, broad stock and commodity rallies, and a continuing fall for the dollar.
Gold for December delivery rose $27.70, or 3.5%, to end at $819.50 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing level since Oct. 15. It rose as high as $830.10 earlier in the session.
The metal has gained $86.80, or 12%, since Nov. 18. On Friday, it rallied more than $40, capping off a rise of 6.6% for the week -- the biggest percentage gain since the week ended Sept. 19.
Gold's gains came as U.S. equity markets jumped and as crude oil and other metals surged. Silver leaped past $10 an ounce for the first time in two weeks.
There was more gloomy news on the economic front to start the week, this time in Germany. A closely watched gauge of business sentiment in Europe's biggest economy plummeted in November to its lowest level in 15 years.
Similarly, U.S. existing-home sales retreated last month as the weak stock market and a poor economic backdrop caused buyers to pull back, according to the National Association of Realtors on Monday.
Late Sunday, the U.S. government agreed to extend Citigroup a $326 billion rescue plan designed to avoid financial collapse, helping stocks to surge Monday.
"Dollar weakness and oil strength are contributory factors that drove gold higher, but safe-haven buying looks to be a primary cause," said Mark O'Byrne, executive director at Gold & Silver Investments.
In foreign-exchange trading, the dollar index (DXYUS Dollar Index Future - Spot Price
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Still well below record
Despite recent rallies, gold futures are still 18% below their record above $1,000, hit in March. The metal slumped 18% in October, the biggest monthly loss since 1983.
However, as safe-haven investment demand returns, some analysts believe gold is destined to rise further.
"Momentum players are likely to be as ever making the trend their friend," said O'Byrne. "We are likely seeing more short covering as hedge funds and institutions may realize that the worst of the deleveraging is over."
In gold spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $822.50 an ounce Monday afternoon, up $48 from Friday afternoon.
Holdings in the SPDR Gold Trust (GLDspdr gold trust gold shs
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GLD) added 2.1% to $80.53.
Rounding out Comex action, December silver jumped 9.2% to $10.355 an ounce, rising to above $10 for the first time since Nov. 10.
December palladium rallied 9.5% to close at $195.80 an ounce, and January platinum added 4.9% to $866.40 an ounce. December copper also spiked higher, adding 6% to $1.6735 a pound.
On the equities side, the Amex Gold Bugs Index (HUIamex gold bugs index equal-$ weight
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