Tags: Gold | Futures | Surge | Record | Settlement | Currency | Concerns

Gold Futures Surge to Record Settlement on Currency Concerns

Monday, 06 Dec 2010 03:14 PM

Gold futures rose to a record settlement of $1,416.10 an ounce on concern the U.S. will pump more cash into the economy and Europe’s debt woes will spread, boosting the appeal of the metal as an alternative currency.

Federal Reserve Chairman Ben S. Bernanke said the central bank may boost Treasury purchases. European officials were split on containing the sovereign-debt crisis. Gold priced in euros and U.K. pounds rose to records, and silver futures topped $30 an ounce, extending a rally to a 30-year high.

“Further currency debasement is the new norm,” said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago. “As long as that stands, investors are going to buy metals as a hedge against paper money. Gold has clear sailing to go much further from here.”

Gold futures for February delivery closed up $9.90, or 0.7 percent, at 2:14 p.m. on the Comex in New York. Earlier, the price reached $1,422.40, $1.90 away from the intraday record of $1,424.30 on Nov. 9. The metal has gained 29 percent this year.

Unemployment may take five years to fall to a normal level, and Fed buying of Treasury securities beyond the $600 billion announced last month is possible, Bernanke said in an interview broadcast yesterday by CBS Corp.’s “60 Minutes” program.

Gold is poised for a 10th annual gain after governments spent trillions of dollars and kept interest rates low to bolster economies.

Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, has recommended owning gold in foreign currencies to limit exposure to a rally by the dollar. The greenback rose as much as 1.3 percent today against the euro.

‘Reservable Currency’

“Owning gold in this fashion relieves us of exposure to the dollar,” Gartman said. “It takes gold away from being a bet against the dollar and to being a bet for gold as a reservable currency.”

Gold’s gains have been capped by demand for the dollar as a haven from Europe’s escalating debt, Zeman of LaSalle said. He has forecast gold will rise to $1,500 by the end of the year.

“Without the eurozone troubles in the background, we’d see the dollar much weaker and gold much higher,” Zeman said. “These debt issues continue to pop up, and printing more money is essentially a huge positive for gold.”

Gold probably will advance to $1,500 next year on demand from investors and central banks, Bank of America Merrill Lynch said in a report dated Dec. 3.

Silver futures for March delivery rose 46.4 cents, or 1.6 percent, to $29.735 an ounce. Earlier, the price reached $30.115, the highest since 1980. The metal has surged 77 percent this year.

Palladium futures for March delivery fell $18.70, or 2.4 percent, to $751.40 an ounce on the New York Mercantile Exchange. The price has jumped 84 percent this year.

Platinum futures for January dropped $14.90, or 0.9 percent, to $1,713.60 an ounce. The metal has climbed 17 percent this year.

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Gold futures rose to a record settlement of $1,416.10 an ounce on concern the U.S. will pump more cash into the economy and Europe s debt woes will spread, boosting the appeal of the metal as an alternative currency.Federal Reserve Chairman Ben S. Bernanke said the central...
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2010-14-06
Monday, 06 Dec 2010 03:14 PM
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