Gold sets record high as dollar grows weaker on expectations of more Fed action on economyBy AP
Friday, October 1, 2010
Gold prices set record high on weaker dollar
Gold prices set a record high Friday amid growing speculation that the Federal Reserve may take additional steps to boost economic growth.
Gold for December delivery gained $8.20 to settle at $1,317.80 an ounce after hitting $1,322 an ounce earlier in the day. Many analysts believe the price could climb even higher before the end of the year.
Much of the increase can be traced to the dollar, which has weakened recently because of speculation that the Fed will take action such as buying more government debt. That would force down interest rates and could weaken the value of the dollar even more.
William Dudley, president of the Federal Reserve Bank of New York, added fuel to the rumors Friday when he said the Fed likely will take additional action if the economy doesn’t strengthen.
HSBC analyst James Steel said any hint of Fed movement “at the moment is supportive of the market.”
Since gold and other commodities are priced in dollars, a weaker dollar makes them more attractive for buyers who use other currencies.
Most metals followed gold’s lead and settled higher. In December contracts, silver gained 23.9 cents to $22.060 an ounce and copper rose 3.9 cents to $3.6905 a pound. December palladium added $3.65 to settle at $574.90 an ounce and October platinum settled up $23.90 to $1,675.90 a pound.
In other trading, corn prices fell a second day after some traders sold contracts to take a profit in wake of a government report issued Thursday that showed corn inventories were higher than expected on Sept. 1.
Corn for December delivery fell 30 cents to settle at $4.6575 a bushel. Wheat for December delivery slipped 19 cents to settle at $6.55 a bushel and November soybeans lost 49.75 cents to $10.57 a bushel.
Oil prices rose a third day on mixed global economic news.
A survey showed Chinese manufacturing growth picked up its pace last month, which was an indication that its economic recovery was on track.
In the United States, the Institute for Supply Management said its manufacturing index indicated an expansion in factory activity was slowing. Other reports showed personal income and spending both rose more than expected in August.
Benchmark oil for November delivery gained $1.61 to settle at $81.58 a barrel on the New York Mercantile Exchange.
In other Nymex trading in November contracts, heating oil rose 2.6 cents to settle at $2.2938 a gallon, gasoline added 5 cents to $2.0861 a gallon and natural gas lost 7.5 cents to settle at $3.797 per 1,000 cubic feet.
Tags: Commodity Markets, Prices, Record Setting Events