Gold Hits Record $900 Per Ounce By AP/STEVENSON
(NEW YORK) Gold futures briefly rose above $900 an
ounce Friday for the first time as high oil prices, a weak
dollar and fears of a U.S. recession led uneasy investors
to keep buying the precious metal.
An ounce of gold for February delivery on the New York Mercantile
Exchange jumped $6.50 to $900.10 in morning trading, an all-time
high and a psychologically important milestone. Gold later
slipped to $898.70 an ounce on profit-taking but remained
in record territory.
"It's a reflection of market sentiment: Gold is a hedge
against uncertainty and right now it's the best bet,"
said Carlos Sanchez, a precious metals analyst at CPM Group
in New York. "None of the other investment options look
that great and gold does."
Still, when adjusted for inflation, gold remains well below
its all-time high. An ounce of gold at $875 in 1980 would
be worth $2,115 to $2,200 today.
Gold has had a meteoric rise the past year rising
nearly 32 percent in 2007 boosted by a falling dollar,
rising prices for oil and other commodities and increased
Middle East instability. Those trends have lifted the metal's
appeal as a haven; gold is seen as a safe investment in times
of political and economic uncertainty around the world.
Also driving gold higher was Federal Reserve Chairman Ben
Bernanke's pledge Thursday to cut interest rates to boost
the economy, which some fear may be sliding toward recession
amid turmoil in the housing and credit markets.
Lower interest rates tend to depress a country's currency
and drive investors to shift funds to hard assets, like gold.
A cheap dollar can make commodities more attractive as an
alternative investment, and can also raise demand from foreign
buyers as their currencies gain strength.
"Concerns of a recession will keep pushing up gold prices,"
Sanchez said. "Depending upon what happens in the economy
and in the Middle East, we could see gold testing $1,000 an
ounce, maybe even this quarter."
Hedge and pension funds, along with other long-term investors,
also flocked to gold as the mortgage and credit crisis in
the U.S. intensified.
"The funds are really heavily at play ... The momentum
with gold is almost like mania. We keep wondering how high
it will go," said Jon Nadler, an analyst with Kitco Bullion
Dealers in Montreal.
Investors looking to get in on the gold rush can expect continued
volatility for the rest of the year, said Nadler, whose firm
forecasts a trading range of $750 to $950 an ounce.
The steep rise in precious metals will also mean consumers
in the United States the biggest buyer of gold after
India can expect to pay higher prices for gold earrings,
bracelets and other jewelry.
"People are going to feel that sticker shock when they
go down Fifth Avenue," Nadler said. "You'll start
seeing the increase reflected as early as Valentine's Day."