MW: Gold rises as dollar weakens; copper soars 12%
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures rose Wednesday as the dollar fell against most major rivals, increasing gold's appeal as an alternative investment.
December gold rose $13.50, or 1.8%, to close at $755 an ounce on the Comex division of the New York Mercantile Exchange. It surged as high as $775.30 earlier.
After regular floor trading ended, the Federal Reserve cut its key interest rate by half a percentage point. Gold moved higher in electronic trading.
"Some are beginning to extrapolate the medium- to long-term consequences of central-bank monetary creation," said Jeffrey Nichols, managing director at American Precious Metals Advisors. "The flashing lights that they are seeing ahead are the lights of inflation and currency depreciation," which could push gold higher.
In currencies trading, the dollar moved lower against the euro and the British pound. The dollar index , which tracks the value of the greenback against other major currencies, lost 1%. See Currencies.
A weaker dollar tends to increase investors' demand for gold as an alternative investment.
Gold's gains coincided with broad rallies in other commodities, including crude oil's surge of more than 7%. The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, jumped 5.9%. See Futures Movers.
Also in metals, the benchmark silver contract jumped 12%. Copper, a metal seen as an economic barometer, also surged 12%, rebounding for a third day from its three-year low.
"Recent movements in both the equity and currency markets suggest some risk appetite is beginning to return," said TheBullionDesk.com analyst James Moore in a note to clients.
"This, coupled with the fact gold is considerably lower than at the start of the year and investors may look to further diversify their asset holdings, may allow gold to begin recouping some of its losses," he wrote.
Stock-market rallies
Also boosting commodities, stocks rallied around the world. Following a sharp rise in U.S. stocks Tuesday, markets made major gains in Asia and Europe on Wednesday. U.S. stocks finished mainly lower.
In gold spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $764 an ounce Wednesday afternoon local time, up $33.50 from Tuesday afternoon.
In exchange-traded funds, gold in the SPDR Gold Trust, the largest gold ETF, stood at 749.21 tons Tuesday, unchanged from Friday, according to the latest data from the fund. Gold held by the fund hit a record high of 770.64 tons on Oct. 10.
The SPDR Gold Trust rose 0.3% to close at $74 on the New York Stock Exchange.
Gold futures have come under heavy selling pressure in recent weeks, with the benchmark contract falling in 10 of the past 14 sessions since closing above $900 an ounce on Oct. 8. It is now $84, or 10%, lower than it was at the beginning of this year.
In other trading, December copper closed at $2.088 a pound, while December silver ended at $9.805 an ounce. December palladium rose 7.3% to $197.10 an ounce, with January platinum ahead 1% to $816.60 an ounce.
The Amex Gold Bugs Index surged 13% to end at 195.09 points. IShares Gold Trust rose 0.7% to close at $74.29, while the iShares Silver Trust ETF gained 6.9% to finish at $9.67.
The Market Vectors-Gold Miners ETF jumped 11.6% to close at $20.86.
