Gold prices at highest level in past twenty-seven years as dollar plunges
It was a shining time for the bullion metals at Comex on Friday, 26 October, 2007 with gold prices and silver prices rising. A new all-time-low dollar against the euro and all time high crude prices sent precious metals to their new high levels.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Comex Gold for December delivery rose $16.5.5 (2.1%) to close at $787.5 an ounce on the New York Mercantile Exchange today. Earlier in the day, it rose to a high of $789/ounce. It was the highest price after a record $873 on 21 January, 1980. Before today, prices reached a 27-year high of $776.90 last Friday (19 October).
Comex Silver futures for December delivery rose 37.5 cents (2.7%) to $14.28 an ounce. The metal has climbed 10% this year.
In the currency market today, the dollar was lower against most major currencies except for the yen. Dollar was dragged down by surging oil prices today. The euro traded at $1.4383 after earlier rising to $1.4392. Crude oil closed at $92/barrel today after trading on fresh Middle East tensions between Iran and Iraq.
The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 0.3% at 77.04.
As usual, dollar also dropped on speculation that Federal Reserve might be going for another interest rate cut in this year.
In recent times, the weakening of dollar have continued to affect the price of the metal. Dollar had been witnessing a free fall since Federal Reserve cut interest rates by half percentage point. The U.S. currency has lost almost 8.3% against the euro this year.
Gold prices have jumped 15% during the third quarter and it is the most since 1999. The yellow metal has climbed 23% this year. Since the last rate cut, prices have gone up by almost 7%.
At the MCX, gold prices for December delivery closed at Rs 9978 per 10 grams. The closing price is Rs 150 (1.5%) higher as against previous closing price. Prices rose to a high of Rs 9987 per 10 grams and fell to a low of Rs 9834 per 10 grams during the day’s trading.
At the MCX, silver prices for December delivery closed Rs 317 (1.7%) higher at Rs 18,684/Kg. Prices opened at Rs 18,390/kg and rose to a high of Rs 18,698/Kg during the day’s trading.