As Dollar Dips, Investors Put More Cash in Precious Metals; Gold Rises to New 27-Year Record.
Gold prices rose for the fifth day in a row Thursday to their highest level in more than 27 years, as investors again turned to the precious metal as an alternative to the plunging U.S. dollar.
The dollar fell versus the euro and the British pound after Federal Reserve Chairman Ben Bernanke said U.S. economic growth would stay sluggish for the next few months.
Infinity Futures senior trader Larry Young said there could be a short-term pullback in gold from recent highs, but he is betting it will rise to $1,000 an ounce. The dollar does not appear headed for recovery anytime soon, and demand from gold buyers and investors remains strong. "The gold bugs have always been there, but the chorus is getting louder," Young said.
Gold for December delivery rose $4 to settle at $837.50 an ounce on the New York Mercantile Exchange, its highest close since 1980.
Bernanke's comments, meanwhile, also put a damper on oil's climb toward $100 a barrel. After hitting a record $98.62 early Wednesday and then pulling back when the Energy Department said crude inventories fell by a smaller amount than analysts expected, prices on Thursday retreated further. With Bernanke predicting slower growth, traders waited for evidence that U.S. demand can actually support $100-a-barrel oil.
Speculation has certainly played a role in oil's climb, but Barclays Capital commodities researchers noted there hasn't really been a big influx of speculators. Non-commercial positions are just below 9 percent -- up from 5 percent in 2006 but down from 10 percent in early 2004.
Non-commercial investors are mostly hedge funds looking to make money in the energy markets; commercial investors tend to be companies with oil-related businesses looking to hedge their bets.
Light, sweet crude for December delivery fell 91 cents to settle at $95.46 a barrel on the Nymex. December gasoline fell 0.3 cent to settle at $2.4376 a gallon; December heating oil fell 1.17 cents to settle at $2.6058 a gallon; and December natural gas rose 8.9 cents to settle at $7.713 per 1,000 cubic feet. The government reported that natural gas inventories rose last week by 36 billion cubic feet, in line with expectations.
Bernanke's warning certainly did not boost industrial metals prices, which have declined in recent weeks because of overriding worries that the sinking housing market is dragging on U.S. industrial metal demand, and that Chinese demand is slowing, too. Industrial metals have not benefited from the weakening dollar like precious metals and oil have.
Most base metals on the London Metal Exchange -- particularly copper, tin and lead -- fell Thursday. On the Nymex, December copper dropped 5.5 cents to $3.2040 a pound.
The stock market was volatile Thursday. The Dow Jones industrial average dropped by more than 200 points at times but ended down 33 points, extending the 360-point plunge it took Wednesday. The blue chip index is still up more than 6 percent for the year, but it's down more than 6 percent from the record close it reached in early October.
Gold prices rose for the fifth day in a row Thursday to their highest level in more than 27 years, as investors again turned to the precious metal as an alternative to the plunging U.S. dollar.
The dollar fell versus the euro and the British pound after Federal Reserve Chairman Ben Bernanke said U.S. economic growth would stay sluggish for the next few months.
Infinity Futures senior trader Larry Young said there could be a short-term pullback in gold from recent highs, but he is betting it will rise to $1,000 an ounce. The dollar does not appear headed for recovery anytime soon, and demand from gold buyers and investors remains strong. "The gold bugs have always been there, but the chorus is getting louder," Young said.
Gold for December delivery rose $4 to settle at $837.50 an ounce on the New York Mercantile Exchange, its highest close since 1980.
Bernanke's comments, meanwhile, also put a damper on oil's climb toward $100 a barrel. After hitting a record $98.62 early Wednesday and then pulling back when the Energy Department said crude inventories fell by a smaller amount than analysts expected, prices on Thursday retreated further. With Bernanke predicting slower growth, traders waited for evidence that U.S. demand can actually support $100-a-barrel oil.
Speculation has certainly played a role in oil's climb, but Barclays Capital commodities researchers noted there hasn't really been a big influx of speculators. Non-commercial positions are just below 9 percent -- up from 5 percent in 2006 but down from 10 percent in early 2004.
Non-commercial investors are mostly hedge funds looking to make money in the energy markets; commercial investors tend to be companies with oil-related businesses looking to hedge their bets.
Light, sweet crude for December delivery fell 91 cents to settle at $95.46 a barrel on the Nymex. December gasoline fell 0.3 cent to settle at $2.4376 a gallon; December heating oil fell 1.17 cents to settle at $2.6058 a gallon; and December natural gas rose 8.9 cents to settle at $7.713 per 1,000 cubic feet. The government reported that natural gas inventories rose last week by 36 billion cubic feet, in line with expectations.
Bernanke's warning certainly did not boost industrial metals prices, which have declined in recent weeks because of overriding worries that the sinking housing market is dragging on U.S. industrial metal demand, and that Chinese demand is slowing, too. Industrial metals have not benefited from the weakening dollar like precious metals and oil have.
Most base metals on the London Metal Exchange -- particularly copper, tin and lead -- fell Thursday. On the Nymex, December copper dropped 5.5 cents to $3.2040 a pound.
The stock market was volatile Thursday. The Dow Jones industrial average dropped by more than 200 points at times but ended down 33 points, extending the 360-point plunge it took Wednesday. The blue chip index is still up more than 6 percent for the year, but it's down more than 6 percent from the record close it reached in early October.
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