Why Gold Futures are Skyrocketing
By Jane Louis
2007-09-21 09:15:15
Gold futures soared $10.40 to finish at $739.90 per ounce on the New York Mercantile Exchange. Gold futures hit their highest price in 27 years today as the U.S. dollar continued its downward spiral, reported MarketWatch.
"Investors are flocking to gold today as the U.S. dollar continues its slide," said Peter Spina, an analyst at GoldSeek.com. "This rally could carry the price to and past the $800 mark before it takes a rest. The fundamentals and technicals are supporting this view."
"The weakness in the U.S. dollar reflects the potential for further problems in the U.S. economy as well as the impact of interest rate cuts on the U.S. dollar," said Kathy Lien, chief strategist at Forex Capital Markets LLC, in a research note Thursday.
"The reason why the dollar can be blamed for the strength of oil and gold is because a weak dollar induces inflationary pressures."
Gold's strong fundamentals and support system are driving the bull market, reported Reuters.
"Technically speaking, we are moving through to uncharted waters if we breach $730 cleanly. And that would be very positive for gold because it does open up the upside," said David Holmes, director of metals sales at Dresdner Kleinwort.
"The scenario is quite bullish. There is still an underlying credit concern that makes gold a sensible investment."
The U.S. Federal Reserve's rate cut this week sparked fears of inflation and set gold up for its rally, according to The Bloomberg News.
"When the bond markets and currency markets move, it is a shout rather than a whisper to the gold market," said Leonard Kaplan, president of Prospector Asset Management. "The Fed has thrown in the towel in its fight against inflation."
"The rate cut is killing the dollar," said Tom Winmill, president of Midas Management Corp. "If the Fed has to cut interest rates again, gold could take off to $1,000."
Silver for December jumped 36.50 cents to end at $13.470 an ounce, while October platinum gained $20.10 to finish at $1,328.60 an ounce. December palladium added $7.60 to end at $344.10 an ounce, and copper for December delivery traded up 1.90 cents to finish at $3.5945 a pound. |
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