Gold Taps New Record as U.S. Joblessness Hits 10%


"…to have India jump into this is very positive for gold."

Gold futures barreled to a new record high above $1,100/oz. Friday, as news that the U.S. unemployment rate topped 10.2% in October boosted expectations the Fed will keep interest rates near zero well into next year, pressuring the dollar.

Gold for December delivery, the most active futures contract, rose as high as $1,100.50/oz. on the New York Mercantile Exchange. It gained up to $1,101.90/oz. in electronic trade. It recently gained $5.20, or 0.5%, to $1,094.50/oz.

Industrial metals, such as copper, however, moved lower. Copper, sometimes called "the metal with a PhD. in economics," fell 1 cent, or 0.4%, to $2.94 a pound.

"With unemployment at 10%, the implications for Fed policy is that they have their hands tied and cannot defend the dollar," said Joe Foster, manager of the Van Eck International Investors Gold Fund.

"We're going to see lots of new records going forward," he said. "By year end, it wouldn't surprise me to [see gold] test $1,200 and then $1,300 by early next year before we see some consolidation."

The SPDR Gold Trust (GLD) bucked the trend, rising 0.2%.

Also providing support for gold are expectations of more central bank purchases. On Monday, the Reserve Bank of India surprised markets by purchasing 200 tons of gold from the IMF, nearly half of the 403.3 tons the IMF plans to sell over the coming years.

"India was a surprise," Foster said. "We knew that China and Russia were buyers but to have India jump into this is very positive for gold. Many central bankers are worried about the dollar, so they're looking at alternatives."

In other metals, silver for December delivery fell 7 cents, or 3.6%, to $17.33/oz., while January platinum slumped $16.10, or 1.2%, to $1,346.80/oz.

December palladium fell $3.00, or 0.9%, to $328.85/oz.

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