Gold Prices Pop to New Record Highs
Source: The Street, Alix Steel (10/13/10)
"Investors bought the metal as protection against a weakening USD."
The U.S. dollar index was slipping 0.38% to $77.07 while the euro added 0.22% to $1.39 vs. the dollar. The spot gold price was up $18, according to Kitco's gold index.
Gold prices were rallying hard after the minutes of the last Federal Reserve policy-setting meeting signaled that the central bank is ready to jump-start another stimulus program. The Fed governors downgraded growth prospects for the U.S. economy for the rest of 2010 and 2011.
Gold prices had been struggling as investors took advantage of high prices and booked profits, but after the Fed minutes were released, gold started to pare its losses and has rallied to almost new record highs. Gold has now hit a new intraday high of $1,375.70 an ounce, easily surpassing its previous record of $1,366.
More accommodative measures mean the Fed will expand its balance sheet by printing more money to buy more government debt and literally pump more money into the system. As the Fed prints money, the dollar loses value, which is good for gold prices.
Currency issues and the race to debase might also see an additional push Wednesday after China reported that September exports rose 25.1% as its currency stayed low despite the country's announcement in June that it would let the yuan rise in value.
Wednesday's rally in gold is also triggering technical buying from traders who sold at record prices and are now looking to jump back in.