Steve Watson
Infowars.com
Friday, Aug 6th, 2010
Strongest rally for precious metal in nine months
Gold prices have surged to to three week highs as the stock market and the U.S. economy continue to flounder, leaving investors seeking a safe haven in hard assets.
Gold futures for December increased by around 1 percent, $9.90 to $1,209.20 this morning on the Comex in New York.
The rise constitutes the eighth day straight gain for gold, the longest rally since last November, reaching its highest peak since July 15th.
The run comes in the wake of a decline for the dollar, which today hit a three-month low against the euro following a payroll report that signaled the U.S. will be slow in recouping jobs lost in the recession.
The greenback was also down 0.6 percent against a basket of six currencies. U.S. stock index futures also fell sharply.
The following graph illustrates
“The dollar is getting odious compared to the euro, which was the rankest thing around in the first half of this year,” Frank McGhee, head dealer at Integrated Brokerage Services LLC told Bloomberg.
“If the Fed has to do something more accommodative to spur the economy, you’re going to see an explosive rally in gold.” he added.
Ole Hansen, senior manager at Saxo Bank, told Reuters that the payroll data had proved “a bad report that could bring forward additional monetary expansion, which can be dollar negative and therefore supportive for gold.”
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Other investors see gold re-establishing its typical relationship with the dollar after both bounced higher in recent months on the back of risk aversion.
“We saw that negative correlation shift to a positive correlation between the dollar and gold since January, up until the last few weeks,” said RBS analyst Daniel Major.
“Gold is going to fall back more into its traditional relationship with the dollar,” he said.
Silver prices also rose today in line with gold to $18.45 versus $18.31.
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