11/8/2010 3:29:08 PM
cerious22
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SAN FRANCISCO (MarketWatch) - Gold futures overcame initial weakness to hit a record high Monday, soaring beyond $1,400 an ounce.
Gold for December delivery (COMMODITIES:GCZ10) added $7.20, or 0.5%, to $1,405 an ounce on the Comex division of the New York Mercantile Exchange. It touched an intraday high of $1,407.20 an ounce.
Gold began floor trading in the red, losing as much as $10 from Friday's settlement close as the dollar rose.
The metal pared its losses, however, as renewed worries about Europe's debt woes took center stage.
The cost of insuring Irish debt against default ballooned Monday, and the cost of insuring Portuguese debt also widened to a record.
The gold contract's Friday settlement at $1,397.70 an ounce was a record finish for the metal. Silver and copper also hit historic high marks.
The catalyst was the Federal Reserve's decision to embark on a fresh round of bond buying, to the tune of $600 billion over eight months. This gave investors a fresh reason to sell the dollar.
The dollar traded stronger to kick off the week, however, pressuring commodities to start. The dollar index (BOARD: DXY) , which tracks the performance of the greenback against a basket of six rival currencies, rose 0.5% to 76.94.
The euro weakened as bonds from Greece, Ireland and Portugal came under pressure - a fresh flare-up of the sovereign-debt problems Europe has faced for much of the year.
As world leaders prepare to meet in Seoul this week, Robert Zoellick, president of the World Bank, said in a Financial Times op-ed piece that leading economies should consider "employing gold as an international reference point of market expectations about inflation, deflation and future currency values."
A return to some sort of currency link to gold would be "practical and feasible, not radical," Zoellick said. He made the proposal as part of reforms to be considered ahead of the Group of 20 meetings in South Korea. Read more about Zoellick's comments
That gold didn't rise early Monday after Zoellick's piece became the talk of the town "tells you the story," said Bill O'Neill, a principal at Logic Advisors in New Jersey.
"The gold standard is not going to happen anytime soon," he said. To pull off something as daunting and complicated in modern-day financial world would require a concerted political will that just isn't there, O'Neill added.
Such a system could stabilize gold and turn what is still a thin market into a more orderly one, said James Cordier, a portfolio manager at Optionsellers.com in Florida. Currencies would also benefit, he added.
"We'd have our paper [money] tied to something," he said.
Meanwhile, silver continued to rally to 30-year highs, pushing toward $27 an ounce. Silver for December delivery (COMMODITIES:SIZ10) added 8 cents, or 0.3%, to $26.83.
Copper for December delivery added one cent, or 0.2%, to $3.96 a pound.
edited by cerious22 on 11/8/2010
edited by cerious22 on 11/8/2010
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