Instability On World Markets – Gold And Silver Prices Increase – The Dollar Declines

Andra Marinescu

Written by Andra Marinescu on September 30th 2010
Posted in: Business
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Bars Of Gold. Where Is The Gold Price Headed?

The gold price reached a new historical high yesterday in the context in which the dollar has depreciated against many currencies, reaching the minimum level in the last eight months.

Thus, the metal was traded at $ 1,312.05 an ounce, while the futures prices for December on the U.S. market have also reached a new peak – $ 1313.5 per ounce. In ten of the last 12 issues, the gold price reached new records.

The price of silver also increased significantly, reaching the maximum of the last 30 years. The growth was of 0.65% yesterday, to $ 21.83 per ounce. The U.S. currency suffered a steep drop amid the anticipation of new measures to stimulate the economy implemented by the Federal Reserve, the Central Bank of the United States.

“The demand for gold is rising because the U.S. economy is fragile and the Federal Reserve will launch new measures to support,” said Ronald Leung, director of Lee Cheong Gold Dealers Company in Hong Kong, quoted by Reuters.

At the beginning of this week


Silver has gained 27% this year, while gold gained 18% from early this year, outperforming the shares, the securities and most of the industrial metals, writes Bloomberg.

Late last week, the dollar fell to its lowest level since February against the top currencies, while the U.S. Central Bank (Fed) keeps borrowing costs down and gets closer to new measures meant to ease the monetary policy in order to help the economy.

Gold and silver are going up

“You have enough room to maneuver on gold,” said Michael Guido, director of hedge fund sales at Macquarie Bank in New York. “There is no reason to fear that interest rates will rise and the dollar decline is back again. Silver has not broken any record and we will see a further price increase.”

Silver futures contracts maturing in December rose last week by 18.6 cents, respectively by 0.9%, before settling at a price of $ 21.399 an ounce (75 cents a gram) in the commodity exchange Comex in New York. During the same stock session, the price reached $ 21.48, the new high after the October 1980 peak.

Gold futures prices maturing in December rose on Friday by $ 1.8, respectively by 0.1% to $ 1,298.1. Earlier that day the yellow metal had climbed to a record high of $ 1,301.60.

In the past week, silver gained 2.8%. In the third quarter, the price increased by 14%, thus heading for the seventh consecutive quarter of growth.

In the case of gold, it had a weekly advance of 1.6%. In July-September period was 4.2% gain. If the addition is completed quarter, it would become the eighth consecutive quarter of growth.

“Gold has reached a psychological threshold of $ 1,300. For this reason some will try to collect their profits,” said Matthew Zeman, metals trader on the LaSalle Futures Group in Chicago. “Expect the price of gold will continue to grow. There is nobody to take his chest. Fed again gives way to print money machine and the dollar will suffer because of it.”

U.S. central bank has kept monetary policy rate from 0 to 0.25% in December 2008 and purchased mortgage-backed securities and treasury bills worth hundreds of billions of dollars in an attempt to help the economy.

Strategies Fed reported last week that the central bank could buy new titles, and given that inflation is low, meaning that for an extended period of time credit costs we will stay down.

“If the Fed announces that it wants inflation, people have reasons to buy gold now,” said Barry James, chief executive of James Investment Research in Xenia, Ohio.

Gold reached a record level for the sixth time in the last seven sessions, and investors looking for a cheaper alternative to silver, analysts say.

“When gold reaches this level, you’ll see a replacement,” said Guido of Macquarie. “Silver will also attract attention from its industrial base.”

Will an ounce of old reach $ 2000?

At the beginning of the decade ounce of gold was about $ 300. Gold has become for most investors a safety net against possible crises, and this has led to a massive increase in the price of the yellow metal. Nobody seems afraid of this development, even more; shoppers flock and say that trend will continue. Late last year, Jim Rogers, an investor who became known after he invested in raw materials, estimated that an ounce of gold could end up costing $ 2,000 ($ 71 grams). Nouriel Roubini, an economist who predicted the current global crisis, but it contradicted Rogers, testifying about his statement that “totally incorrect”. He argued that there is inflation or economic pressures that lead to cost $ 2,000 an ounce.

Previous Record Levels

Previously, the price of the yellow metal has reached historic high record: $ 1,284.40 per ounce. Previous records were recorded on Tuesday ($ 1,271.7 an ounce) and Thursday ($ 1,273.80 an ounce). From September 13 to 17, the quotation of precious metal has gained 2.5%.
Quotation of gold for immediate delivery rose to a record $ 1,282.97 an ounce on Friday. According to “Goldman Sachs Group Inc., the gold price will reach $ 1,300 an ounce in six months. Also Friday, the price with delivery in December silver rose 4.5 cents (0.2%) to $ 20.816 an ounce, to end the day. It was the highest closing price since October 16, 1980. Prior to Friday’s closing, the quotation was even higher: $ 21.025 an ounce.

Since the beginning of, quote-cut gold increased by 17% and silver – 24%, the evolution of these precious metals is much better than that of shares, bonds or other raw materials. Analysts believe that the gold price in the context of accelerating financial market instability. Please note that the last day of last week, and platinum prices followed an upward trend. Quotation deliver in October platinum rose $ 10 (0.6%) to $ 1,621.90 an ounce at the New York Mercantile Exchange.

Currencies face problems

The high records of the gold prices confirm that this is valuable refuge on the depreciation of the dollar. At the same time, the euro has strengthened its position against the dollar, climbing to the highest level in five months, after the disappointing U.S. indices, while the Swiss franc also reached the greatest value against the dollar. In the early hours of yesterday morning, the euro cost was of $ 1.3589, after a brief stop at a high of $ 1.3639.11


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2014-07-31 11:40:10