MW: Gold futures rise to highs near $1,390 on Globex
By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) — Gold futures extended their rally onto Globex Thursday, climbing to fresh intraday highs near $1,390 an ounce in Tokyo’s evening trading, as further weakness in the U.S. dollar boosted investment demand for the precious metal.
Gold for December delivery (GCZ10 1,381, +10.30, +0.75%) was up $14.20 at $1,384.70 an ounce in electronic trading on Globex, after reaching an intraday high of $1,388.10.
Gold futures on Wednesday settled at their 16th record in five weeks, closing at $1,370.50 in New York, up $23.80. See Wednesday’s metals column.
The U.S. dollar’s decline against currency rivals helped drive investors to gold as a safer store of value.
The dollar index, a measure of the U.S. unit against a basket of six major currencies, slipped to 76.521 from 77.061 late Wednesday. See Thursday’s currencies column.
“The irony is that investors seems to be buying gold on fears of both inflation and deflation as well as when the U.S. dollar is rising and falling,” analysts at Deutsche Bank said in a note to clients Thursday. “This is naturally raising concerns that the move in the gold price threatens to become increasingly irrational.”
But gold “seems a safe one-way trade since quantitative easing will tend to accelerate U.S. dollar weakness while any QE action that falls short of expectations would tend to raise risk aversion, strengthen the U.S. dollar and encourage inflows into physically backed gold [exchange-traded funds],” which is what happened in the second quarter of this year, they said.
