Gold surges closer to $1,000
The price of gold surged for a second day Thursday, just falling short of the $1,000-an-ounce mark.
Near-term futures in New York rallied $19.20, or 2%, to $995.80 an ounce after gaining $21.90 on Wednesday.
In the last two years gold typically has attracted heavy interest when the dollar has slumped or when the stock market has tanked, although the metal dived with virtually all other assets in last fall’s global meltdown.
On Thursday, however, stocks rallied modestly and the dollar was little changed against other major currencies.
So, why a big gold rally now, after the metal’s price has mostly treaded water since mid-August?
Matt Zeman, a metals trader at LaSalle Futures Group in Chicago, says one story making the rounds is that gold buyers are expecting a big downdraft in the dollar soon, which conceivably could happen if faith in an economic recovery evaporates.
“There are a lot of big bets being made on the dollar getting weaker,” Zeman said. Gold is the dollar’s archrival, competing against the greenback as a store of value.
It may not be pure coincidence that gold was flying just before the August employment report, which is due from the Labor Department today. Economists expect a net loss of about 230,000 jobs for the month. A much bigger number could stoke new worries about the economy.
Some analysts say gold may be benefiting not just from concern about the dollar’s outlook but also from investor jitters about the future value of all paper currencies, as central banks around the planet pump massive sums of money into the financial system -- a recipe for currency debasement and inflation.
“It could be less about the dollar than that investors are fed up with all currencies,” said Alan Ruskin, foreign-exchange strategist at RBS Securities in Stamford, Conn.
Or, some traders may just be trying to see whether they can push gold decisively over the $1,000 mark, which could attract a new wave of investor interest at a time when industrial and jewelry demand remains depressed because of the economy.
The $1,000 level has been a ceiling for gold since the metal first crossed it in March 2008. The price quickly fell back after that rally.
In February, gold again topped $1,000, and again quickly retreated.
“Maybe the third time is the charm,” Zeman said.
Some traders aren’t bothering with gold, focusing instead on silver, which Thursday zoomed 93 cents, or 6%, to $16.27 an ounce -- a new 52-week high -- in futures trading.
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