Weakness in the dollar is causing a mini gold rush.
The dollar fell to its lowest level since Sept. 1992 against the British pound and is trading just below the $2 level. The dollar is also losing ground against the euro and is at its lowest level in two weeks.
Gold, meanwhile is closing in on its high for the year after a 3.5% jump this week alone. February futures hit a mid session peak today of $646.60 per ounce, before ending the session at $645.50, up $11.80.
"We have recently seen an unexpected move by the Bank of England which has supported the pound versus the major currencies," said John Conolly, vice president at Advantage Futures. "At the same time, without any sign of upcoming rate hikes in the U.S., we continue to see major central banks look to diversifty their investments away from U.S. treasuries and into euros. We have been expecting a continuation of the sell-off in the dollar. Today's move could be a sign of things to come."
Rick Flegenheimer, independent floor trader at the Comex, said this week's options expiration could slow the run in gold this week.
Looking past Thursday's options expiration, he says, "Friday we could have a big move" in both gold and silver.