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NEW YORK (Dow Jones)--Rising risk appetite and a weakening U.S. dollar boosted gold futures to record highs Monday, extending gains amid continued concern about inflation stemming from accommodative central bank monetary policy.
Although gold put in strong gains, the other New York-traded precious metals--silver, platinum and palladium, which are more heavily used in industry than gold--advanced more in percentage terms on the weaker greenback combined with economic and automotive news.
"The move higher continues," said Frank Lesh, broker and futures analyst with FuturePath Trading. "You've got good support, and that should continue, with the dollar looking like it may possibly hit new lows this week."
Most-active December gold rose $22.50, or more than 2%, to settle at $1,139.20 an ounce on the Comex division of the New York Mercantile exchange. It extended the Comex most-active record to $1,144.20 in afterhours electronic trading. Thinly traded nearby November gold gained $22.50 to settle at $1,138.60 a front-month record.
Shortly after gold closed, the ICE Futures U.S. Dollar Index was down 0.198 point at 74.947 point. The 75-point area has proven to be pivotal for gold recently, with buying ratcheting up in the metal when the index dips below that level.
Central banks around the world won't easily be able to pull back the vast amount of liquidity they've pumped into their respective economies, and as such, inflation remains a "real concern," said Rob Kurzatkowski, futures analyst with optionsXpress.
That should mean continued support for gold, often used as an inflation and dollar hedge and more broadly seen as an alternative currency. So far this year, the Dollar Index has lost around 8%. Meanwhile, December gold has risen about 28%.
"At this point, I don't know anything that could stop the gold rally, other than investors being nervous to buy it at these high levels," Kurzatkowski said.
As investors flee the dollar, they are moving into higher yielding currencies, hard assets like gold and other commodities as well as equities. Gains in U.S. equities Monday, with the Dow Jones Industrial Average up 144.73 points at 10,415.20 points shortly after gold closed, were contributing to the dollar's weakness.
After the euro rallied overnight on Japanese economic data, the currency swooned briefly Monday following Fed chairman Ben Bernanke's comments.
http://online.wsj.com/article/BT-CO-20091116-713479.html
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