Gold Rises, Nears Record High as Dollar Drops - Gold * US * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Fashion Show.
The Richest Members of the US Congress
Recently, the Center for Responsive Politics found that there are 237 millionaires in the US Congress.
10 Tips to Get Out of Debt
Renowned financial author Gail Vaz-Oxlade takes a tough-love approach to helping couples in a financial crisis to face reality.

FEATURED QUIZZES

How Much Do You Know About Green?
Green has become part of our everyday lives. Green is everywhere-- energy, clothing, food, housing, transportation. It's a big business and a global business.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?
The Many Myths of Coca-Cola
Can you tell which statements are true, and which ones are just rumors?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

Gold Rises, Nears Record High as Dollar Drops

Published: Friday, 13 Nov 2009 | 5:30 PM ET

Text Size

By: Reuters

Gold turned higher Friday to trade within striking distance of its record high, as a lower dollar amid economic worries boosted bullion's appeal as a currency hedge.

A strong finish above key technical support $1,100 an ounce, driven by the dollar's decline and renewed central bank interest, should fuel further gains next week, traders said.

RELATED LINKS

Spot gold [US@GC.1 Loading... ()] was at around $1,118 an ounce, up from a late quote of $1,103.60 in New York Thursday, when it rallied to a record high of $1,122.85.

U.S. December gold futures settled up $10.10 at $1,116.70 an ounce at the Comex division of Nymex.

"The rally is probably a function of continued concerns about the dollar going into next week," said James Steel, analyst at HSBC in New York. "Another surprise was the fact that gold was able to rally against weak crude prices," he said.

The dollar fell broadly after data showed U.S. consumer sentiment falling in early November to its weakest in three months.

Gold Bars
AP

The U.S. currency is still down about 7 percent so far this year, making commodities priced in the greenback cheaper for holders of other currencies and boosting gold's price prospects.

"The only thing that seems likely to puncture this would be a reversal in the dollar, but it's still on a clear downward trend," said Stephen Briggs, a commodities strategist for RBS in London, adding there was a "uniformity" in the market's view that the dollar would weaken further.

Traders noted that market sentiment has improved after the International Monetary Fund sold 200 tonnes of gold to India last week.

The news fueled expectations that other central banks would make a run for the remaining 203.3 tons gold approved for sale by the IMF.

"If another central bank comes out and decides to get more IMF gold, it will continue to be supportive to the market," said Adam Klopfenstein, senior market strategist at Lind-Waldock. "It's the fear of not able to get your hands on the gold.

Oil Falling

U.S. crude oil initially fell and touched its lowest level in almost a month, further weighing on gold as it often moves in line with crude, both because it can be used as a hedge against oil-led inflation and as rising crude prices often increase interest in commodities as an asset class.

Oil settled near $76 a barrel as a weaker dollar offset demand concerns from bulging fuel inventories in the United States.

Silver [US@SI.1 Loading... ()] traded at $17.25, up from Thursday's New York late quote of $17.21.

Some warned that fundamentals for silver remain a concern.

"Silver is really struggling to keep up with gold at the moment because this is a gold story, it is not a silver story," RBS' Briggs said. "Silver is only a geared play on gold, its own fundamentals are not great. If it weren't for the ETF buying the market is in surplus."