By: Tom Jennemann
New York 20/04/2011 - Comex gold was steady above $1,500 on Wednesday morning on a weaker dollar and governmental debt worries.
But prices have eased slightly from the morning's high following a flood of positive earnings reports and stronger equity markets.
Gold futures on the Comex division of the New York Mercantile Exchange for June delivery were recently trading up $9 at $1,504.10 per ounce in New York and earlier in the session reached an all-time record of $1,506.20.
"The impetus for the run-up early this morning was clearly the softer dollar, which is getting hammered and fell to its lowest level in the past 15 months [against the euro],” a US-based fund manager said. “When the dollar takes a beating like this, metals are going to rally."
The euro rose 1.4 percent to 1.4543 against the dollar this morning largely on increased risk appetite and after a successful bond auction in Spain.
But the yellow metal has edged down marginally from its intraday high since the open of equity markets in New York.
"We've seen some quite positive earning reports from the likes of Intel and Freeport-McMoRan, which had the Dow up by over 175 points," the fund manager said.
“Despite all the dire headlines of late, Wall Street doesn't think the economy is hanging off the cliff,” he added. “Some folks are looking at riskier assets this morning as the stock bulls have returned.”
Standard Bank echoed this sentiment in a note. "Fears that the global economic recovery might be in jeopardy, sparked by Standard & Poor's ratings outlook downgrade of the US, have been dispelled by strong corporate earnings results and a steady improvement in US housing data," analyst Marc Ground wrote.
Existing US home sales rose 3.7 percent in March to an annualised rate of 5.1 million units, slightly ahead of expectations, the National Association of Realtors said on Wednesday morning.
Nevertheless, many investors continue to express concerns about the burgeoning debt crisis in the US and Europe and inflation around the world.
Bolstering this argument was S&P's surprise outlook downgrade of US long-term debt to "negative" to "stable".
"This latest chapter in the saga of sovereign debt concerns highlights gold's benefits as a risk-hedge and currency diversifier. It also presents new challenges for investors who traditionally, in times of uncertainty, steer capital towards US Treasuries," Marcus Grubb, managing director of the Investment at the World Gold Council, said in a statement.
Additionally, the US government does not have a credible plan to cut the deficit, International Monetary Fund chief economist Olivier Blanchard said on Wednesday according to French paper Le Monde.
Comex silver for May delivery also soared on Wednesday - it was recently trading up about one dollar at $44.90 per ounce, which is a 31-year high. The closely watched gold-silver ratio has dropped to 33.5 - a 28-year low.
(Editing by Mark Shaw)
New York 20/04/2011 - Comex gold was steady above $1,500 on Wednesday morning on a weaker dollar and governmental debt worries.
But prices have eased slightly from the morning's high following a flood of positive earnings reports and stronger equity markets.
Gold futures on the Comex division of the New York Mercantile Exchange for June delivery were recently trading up $9 at $1,504.10 per ounce in New York and earlier in the session reached an all-time record of $1,506.20.
"The impetus for the run-up early this morning was clearly the softer dollar, which is getting hammered and fell to its lowest level in the past 15 months [against the euro],” a US-based fund manager said. “When the dollar takes a beating like this, metals are going to rally."
The euro rose 1.4 percent to 1.4543 against the dollar this morning largely on increased risk appetite and after a successful bond auction in Spain.
But the yellow metal has edged down marginally from its intraday high since the open of equity markets in New York.
"We've seen some quite positive earning reports from the likes of Intel and Freeport-McMoRan, which had the Dow up by over 175 points," the fund manager said.
“Despite all the dire headlines of late, Wall Street doesn't think the economy is hanging off the cliff,” he added. “Some folks are looking at riskier assets this morning as the stock bulls have returned.”
Standard Bank echoed this sentiment in a note. "Fears that the global economic recovery might be in jeopardy, sparked by Standard & Poor's ratings outlook downgrade of the US, have been dispelled by strong corporate earnings results and a steady improvement in US housing data," analyst Marc Ground wrote.
Existing US home sales rose 3.7 percent in March to an annualised rate of 5.1 million units, slightly ahead of expectations, the National Association of Realtors said on Wednesday morning.
Nevertheless, many investors continue to express concerns about the burgeoning debt crisis in the US and Europe and inflation around the world.
Bolstering this argument was S&P's surprise outlook downgrade of US long-term debt to "negative" to "stable".
"This latest chapter in the saga of sovereign debt concerns highlights gold's benefits as a risk-hedge and currency diversifier. It also presents new challenges for investors who traditionally, in times of uncertainty, steer capital towards US Treasuries," Marcus Grubb, managing director of the Investment at the World Gold Council, said in a statement.
Additionally, the US government does not have a credible plan to cut the deficit, International Monetary Fund chief economist Olivier Blanchard said on Wednesday according to French paper Le Monde.
Comex silver for May delivery also soared on Wednesday - it was recently trading up about one dollar at $44.90 per ounce, which is a 31-year high. The closely watched gold-silver ratio has dropped to 33.5 - a 28-year low.
(Editing by Mark Shaw)
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