Gold closes above $1,000
Gold fever is back. The question is: For how long?
The precious metal leaped above $1,000 an ounce Friday and stayed in four-digit territory, closing at record highs.
The steady ascent of gold in recent months -- it is up more than 15% since April -- partly reflects a simultaneous slide in the value of the dollar against other currencies, analysts say.
Some gold buyers are also worried about inflation and are skeptical about the ability of any currency to hold its value as they nervously watch the world’s central banks flood the financial system with money. And some gold investors don’t share the faith that the stock market has been exhibiting in a global economic recovery.
“We do see a pickup in demand from people wanting that hard asset and the safety blanket that goes with it,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.
On Friday, the price of the most heavily traded gold futures contract, promising delivery in December, jumped $9.60 to $1,006.40. That broke the previous record of $1,004.30 set almost 18 months ago. The price rose as high as $1,013.70 during Friday’s session.
The contract for delivery this month rose $9.50 to finish the day at $1,004.90.
Although gold has risen from less than $300 an ounce in 2001, climbing much above the $1,000 mark may be a tall order. Each of the two other times it closed above that level -- in March 2008 and in February -- it did so only for a day or two.
Erin Stevenson, whose Long Beach company buys gold at gold-selling events at customers’ homes several times a week, is skeptical of the metal’s staying power.
“But it’s hit or miss -- we’ve been at $1,000 before, but it’s literally for a day and then it pops back down,” she said. “We’ll see if it sticks, but Monday or Tuesday it’ll probably be back down at $950.”
But Brad Zigler, managing editor of Hard Assets Investor, a website about the commodity markets, said the fact that gold had been at this level before might make further gains more likely, not less.
“The last time we got up to these levels, it was all brand-new, uncharted territory,” he said. “This is now ground that’s been trod, and there’s been a large inflow of interest on the long side in gold futures.”
Despite the huge rally in the stock market from 12-year lows set in March, some investors still seem to want a haven in gold. But Zigler sees no contradiction in that behavior.
Gold buyers, he said, may merely want the metal as a lifeline in case the stock market takes another dive.
“We’re now seeing the signs of an attitude of recovery,” he said. “But gold can still provide diversification even in an investment portfolio dominated by equities.”