New York 05/11/2010 - Gold on the Comex division of the New York Mercantile Exchange touched a fresh all-time high Friday and closed just shy of $1,400 an ounce as overall bullish sentiment outweighed a unexpectedly strong US jobs report, which led the dollar to rebound.
Gold futures for December delivery settled up $14.60 to $1,397.70 an ounce. Earlier in the session, the yellow metal hit a lifetime high of $1,398 for the most actively traded contract.
Comex silver also posted strong gains as the December contract touched a new 30-year high of $26.915 an ounce before closing up 71 cents at $26.748.
Precious metal prices are still being swayed by positive post-qunatitive easing (QE2) euphoria. On Wednesday, the Federal Reserve announced its intentions to buy an additional $600 billion in Treasury bonds in an attempt to pump some added life in the economy.
"Today was a continuation of what's been going on. It's all investment demand as people are trying to move out of paper assets because they're afraid that the central banks are going to crank up the printing presses," a US-based gold trader said.
The market even shrugged off a positive jobs report, which typically would have dented bullion prices.
The US Labor Department reported that the economy added 151,000 jobs in October, an improvement over September, when 41,000 jobs were lost, and much better than expectations of a 63,000 gain.
Based on that news, the dollar climbed about 1 percent against the euro to 1.4039 from 1.4215 on Thursday.
"New buying in gold and silver and their record highs led open interest figures to near records. Buyers were anxious enough to ignore the improving dollar and were intent on not missing the market," George Gero, senior vice president and financial consultant with RBC Wealth Management, said.
Gero added that QE2 appears to be working as the weak dollar is allowing foreign buyers to bargain hunt in the metals and agricultural markets.
MKS Finance SA said that the good numbers regarding the US labour market weren't enough to substantially alter the rally in gold, which started since the release of QE2.
"We're just a few steps away from the important $1,400 level which we expect to see very soon in the actual environment of concern over inflation and with the dollar under pressure boosting gold's appeal as a currency hedge," MKS said.
The first trader said that the gold will likely see some physiological resistance around $1,400, which is also a popular option strike price where people could be defending positions.
"It's always dangerous when you go into new high ground as this is a market tends to have some pretty large corrections; however, the last correction we had from $1,388 to $1,315 didn't really change the dynamics of the market or make it bearish," he said.
He added that if the sentiment does changes all at once there would be a big washout, but until that happens money will continue to pour in to metals.
"There are still folks out there who feel they missed the boat and are looking to get in. That's why we're seeing those dips get pretty good support," the trader said.
US Consumer Credit increases $2.15B in September
FXstreet.com (Barcelona) For more information, read our latest forex news.
Consumer Credit
$2.15B
Actual
-$3.10B
Consensus
-$4.93B
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