20:00
Unknown
Gold prices hit their highest level in more than six weeks Tuesday, on a combination of safe-haven buying and short covering.
As of 10:57 a.m. EST, gold for February delivery rose $35.60, or 3%, to $1,230.50 an ounce on the Comex division of the New York Mercantile Exchange. The contract peaked at $1,239, its strongest level since Oct. 23.
March silver rose 83.4 cents, or 5.1%, to $17.11 an ounce. It peaked at $17.20, its most muscular level since Oct. 30.
George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, cited a weaker dollar, sagging equities and traders starting to factor in potential inflation.
“The weaker equities – two days in a row – are of course a flag for the funds,” Gero said.
The Dow Jones Industrial Average was down by 171.60 points. The euro rose to $1.24216 from $1.23166 late Monday.
“There is a huge asset switch,” said one New York-based desk trader. “Stock markets overseas took a hammering overnight, and our own is down….It’s also dollar-related. The dollar is getting hammered the worst in a while.
“It’s just the crowd rushing from one asset class to another.”
Some safe-haven buying is occurring, the trader said, pointing out that U.S. Treasury bonds are also sharply higher. Much of the move in gold is also traders buying to cover short positions, or previously placed bearish bets, he added.
“It’s a combination of things, but it was mostly set off by the weakness in equity markets overseas.”
Tim Gardner, managing director for global metals with TD Securities, said the afternoon London gold fixing of $1,227 an ounce was the highest since Oct. 28.
“Why all the buying?” he asked rhetorically. “There appears to have been some changes in asset allocation, with money flowing out of equities and into safe-haven sectors. Gold, which had been trading with a bearish bias the past month, has seen bouts of short covering, but it feels that some fresh longs may be buying into momentum trades.”
By Allen Sykora
0 comments :
Post a Comment