Tags: Gold | Jumps | Dollar | Drops | Palladium

Gold Jumps as Dollar Drops; Palladium Climbs to Nine-Year High

Monday, 25 Oct 2010 10:07 AM

Gold futures rose the most in more than a week as the dollar fell, boosting demand for the precious metal as an alternative investment. Palladium advanced to a nine-year high.

The greenback dropped as much as 1 percent against a basket of major currencies. A Group of 20 pledge to avoid “competitive devaluation” failed to ease speculation that the Federal Reserve will make more bond purchases. Before today, gold gained 21 percent this year, reaching a record $1,388.10 an ounce on Oct. 14.

“The Fed has put the world on notice that the dollar can no longer be viewed as a safe-haven currency,” Michael Pento, a senior economist at Euro Pacific Capital in New York, said in a report. “During the next crisis, investors should seek the safer harbor that is derived from owning commodities and precious metals.”

Gold futures for December delivery rose $14.90, or 1.1 percent, to $1,340 at 9:59 a.m. on the Comex in New York. Last week, the metal tumbled 3.4 percent, the most since early July.

G-20 officials, ending a meeting in South Korea on Oct. 23, agreed to refrain from “competitive devaluation” and allow markets to set foreign-exchange values, seeking to calm trade tensions. G-20 members will meet again in Seoul on Nov. 11.

“It is safe to sell the dollar on all fronts,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia- based Gartman Letter, said after the meeting. “The world wants to swap dollars for hard assets.”

UBS AG said its gold sales on Oct. 22 to India, the world’s largest buyer, were the third-highest this year.

‘Physical Demand’

“At current prices near $1,350, demand will likely pull back a bit, but should remain healthy” before the Diwali festival at the beginning of next month, UBS analyst Edel Tully said today in a report. “Physical demand at the levels we saw on Friday is usually an indicator that gold’s price trough is very near.”

Palladium futures for December delivery rose $17.90, or 3 percent, to $609 an ounce on the New York Mercantile Exchange. Earlier, the price reached $620, the highest level since June 2001. Before today, the price gained 45 percent this year, outpacing gold and other precious metals.

Platinum futures for January delivery rose $27.40, or 1.6 percent, to $1,702.50 an ounce. Before today, the price gained 14 percent this year.

Palladium and platinum are used to make jewelry and pollution-control devices in cars.

“Palladium has a high exposure to the emerging-markets auto industry,” said Bayram Dincer, an analyst at LGT Capital Management in Switzerland.

Silver futures for December delivery rose 62.7 cents, or 2.7 percent, to $23.745 an ounce on the Comex. Before today, the price gained 37 percent this year, reaching $24.95 on Oct. 14, the highest level in 30 years.

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Gold futures rose the most in more than a week as the dollar fell, boosting demand for the precious metal as an alternative investment. Palladium advanced to a nine-year high.The greenback dropped as much as 1 percent against a basket of major currencies. A Group of 20...
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2010-07-25
Monday, 25 Oct 2010 10:07 AM
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