Gold has hit yet another record peak and industrial metals have pushed higher as investors took surprisingly robust US jobs news as a hint that the American economy is in better shape than previously thought.
The November 2010 US jobs report did help support the dollar and that in turn has curbed commodities price gains. Nevertheless, the overall the dollar weakness of September and October, which made dollar-denominated commodities cheaper for overseas buyers, helped commodities extend their 2010 price gains.
According to a report by spread betting company PipTrade, investors often buy gold as both an inflation hedge and as an alternative to the dollar when the US currency weakens. “These factors will have contributed to gold’s recent record high that was in excess of $ 1,424 per troy ounce. Inflation worries have continued to concern investors, especially after the US Federal Reserve resumed buying government bonds and said that it would buy another $ 600bn by the middle of 2011” it read.
Elsewhere in the metals markets, silver has rallied to $ 29, a 30-year high, on the rising gold prices. Palladium has risen to a new nine year high and copper has also performed strongly and neared record highs. The theory is that the Federal Reserve’s bond buying programme would shore up the US economy and both accelerate inflation and increase demand for raw materials. This could help push the ‘High Grade Copper’ spread betting market to $ 4.04.
Looking in more detail at the Gold markets, a recent City Index report suggested, “As expected, the move above $ 1,388 lifted the yellow metal to even higher prices and the metal is currently enjoying positive momentum. If the upward trend remains in place then there is a significant possibility that the next target will be $ 1,493-$ 1,520.
“Even with the recent move higher, any deviation should be monitored, as there is a possibility that the trend could suddenly reverse. A move below $ 1,350 may see the yellow metal pullback towards $ 1,246. This could however be healthy for the longer term trend. It is also worth noting that the weekly charts are showing no sign of any major weakness yet.”
Financial Spreads have also reported on gold’s gains: “Gold’s latest all time highs came after a very volatile day and a huge $ 40 rally. There was plenty of profit taking as the metal reached a new high but that was not enough to stop the gains. On an analytical level the bulls need to continue pushing the price up or face a technical breakdown. Given that the market has continued to rise though, that has opened the door for attempts at fresh highs.”
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