By: Pham-Duy Nguyen and Nicolas Larkin – Bloomberg News, Oct. 5, 2010
Gold futures jumped to a record $1,342.60 an ounce as the dollar sagged, boosting demand for precious metals as alternative assets. Silver advanced to a 30- year high.
The greenback fell to the lowest level since January against a basket of six currencies. Federal Reserve Chairman Ben S. Bernanke said yesterday the U.S. central bank may buy more debt to help the economy. The Bank of Japan today pledged to keep its benchmark interest rate at “virtually zero” percent. Since Sept. 14, gold has risen to a record in 12 sessions.
“When governments are in the business of printing money, gold is going to do well,” said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago. “More quantitative easing is inevitable at this point for the U.S. The dollar is going to suffer, and gold is going to take out records along the way.”
Gold futures for December delivery rose $23.50, or 1.8 percent, to settle at $1,340.30 at 1:41 p.m. on the Comex in New York. It was the biggest gain for a most-active contract since Sept. 14.
Gold for immediate delivery rose to a record $1,341.28. The price has gained 22 percent this year, heading for the 10th straight annual gain and the longest rally since at least 1920. The metal has outperformed global equities and Treasuries, prompting record investment in gold-backed exchange-traded products.
Japan Fund
The Fed has left its benchmark interest-rate target at a record low and pledged to take more steps to spur growth. Japan’s central bank set up a 5 trillion yen ($60 billion) fund to buy government bonds and other assets.
“Monetary easing in Japan reinforces gold’s role as a store of value in a world of looser policy, as does the threat of competitive devaluation between major currencies,” Edel Tully, a London-based analyst at UBS AG, said in a report.
Gold may reach $1,500 by the end of the year and $2,500 “in a year or so,” Peter Hambro, the chairman of Petropavlovsk Plc, Russia’s third-largest producer, said today in an interview on Bloomberg Television’s “Countdown.”
“We are suspicious of buying more gold here at the current levels, and we are reasonably confident that gold prices might well fall $80 to $100 sometime in the next several weeks,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter.
Silver futures for December delivery rose 70.1 cents, or 3.2 percent, to $22.737 an ounce on the Comex. The price reached $22.79 today, the highest level since September 1980.
Platinum futures for January advanced $28.60, or 1.7 percent, to $1,700.70 an ounce on the New York Mercantile Exchange.
Palladium futures for December delivery jumped $16.90, or 3 percent, to $578.20 an ounce.
