World
gold strikes record as US dollar suffers Posted:
Mon, Nov 9 2009. 11:08 AM IST
As
expectations rise that central banks across the globe might
look to buy gold to diversify their reserves, analysts say
that there could be more upside for the precious metal
Singapore: Gold powered to another record high
on Monday on safe-haven buying as the US dollar slipped and
after a weaker-than-expected US unemployment rate revived
worries about the health of the global economy.
Gold has gained more than 25 % in 2009, driven by persistent
weakness in the US currency that has lost more than 6 % versus
the euro so far this year, and recently by the failure of
a meeting of the Group of 20 finance officials to talk more
specifically about the dollar’s decline..
As expectations rise that central banks across the globe
might look to buy gold to diversify their reserves, analysts
say that there could be more upside for the precious metal.
“The fundamental outlook for gold remains favourable,” Credit
Suisse said in a research report.
Cash gold hit a high of $1,104.80 an ounce, surpassing Friday’s
lifetime high of $1,100.90, with a jump in oil prices and
India’s recent purchase of IMF gold adding to the bullish
sentiment.
US December gold futures jumped as high as $1,105.4 an ounce
to another lifetime high.
“When you look at the RSI on a 14-day basis, it’s still in
a positive story because it’s not overly bought. So, there’s
potential for further upside,” said Mark Pervan, ANZ’s senior
commodities analyst.
“It could move up quite strongly as we haven’t any key resistance
level in place,” he added.
The dollar index slipped 0.23 % to 75.646, while the euro
edged up to $1.4870, with a statement from the IMF that the
dollar remained on the “strong side” despite a recent sell-off
spurring another bout of selling in Asia.
US employers cut 190,000 jobs in October, greater than the
175,000 fewer jobs forecast, and the unemployment rate rose
to 10.2 %, a 26-1/2-year high that was above average forecasts
of a 9.9 % rate. and
“We are in uncharted territory,” said Darren Heathcote, head
of trading at Investec Australia in Sydney.
“The trend is still intact. We’re still looking at a positive
gold market. (There) doesn’t seem to be any particular reason
to be selling. I think we are going to be looking for more
economic data to decide where we go from here.”
In addition to weakness in the dollar, news that the International
Monetary Fund had sold 200 tonnes of gold to the Reserve Bank
of India for $6.7 billion was also a trigger in bullion’s
rise.
Japan’s foreign reserves rose to a record high for the third
straight month in October partly as rising gold prices inflated
the value of its gold holdings, the Ministry of Finance said
on Monday.
“I don’t think there’s physical buying but sentiment is still
bullish because of a strong euro against the dollar and also
firm crude oil prices,” said a dealer in Hong Kong, adding
that the market saw buying interest from speculators in the
United States, Japan and other parts of Asia.
The world’s largest gold-backed exchange-traded fund, SPDR
Gold Trust, said its holdings stood at 1,108.344 tonnes as
of 6 November, unchanged from the previous business day. Non-commercial
net long US gold futures positions fell 0.2 % to 241,319 lots
in the week to 3 November from 241,777, a weekly report by
the US Commodity Futures Trading Commission showed.
Oil prices rose $1 to $78.43 a barrel on Monday, as Hurricane
Ida roared through the Gulf of Mexico, where important oil
fields are located, and on the back of the falling dollar.