Weak dollar sends Gold to all time High

23 November 2009 - Xenia Rainey (Which Way To Pay)

    



Weak dollar sends Gold to all time High

 

 

Gold reached $1,167.35 an ounce in early trading, up by a huge $15 since Friday.  The main factor in the jump was, according to most market analysts, the weak US dollar.

 

Most commodity and foreign exchange investors have been speculating that the central US interest rate will remain low, putting pressure on the US dollar.  This sends many to gold as an alternative investment.

 

Another key factor in the boom for gold is the rising demand coming from emerging nations like China and other Asian nations. 

 

China especially is keen to grow its foreign exchange holdings and wants to encourage a push away from the US dollar as the global reserve currency.  It has been increasing its gold holdings for some years.

 

Gold is looking ever more attractive to investors as sentiment around it is on good form.  Economists generally expect that the price will continue to rise.

 

Indeed, many expect that the price of an ounce will reach $1,200 and beyond in the not too distant future.

 

Gold is not alone as other precious metals rose, boosting the FTSE 100 in London.  It had seen four days of losses but the rise from gold and the other metals caused mining stocks to surge.

 

Copper rallied to its highest price in over a year the FTSE 100 was up 68.54 points (over 1.30 per cent), reaching 5,319.55.

 

On the foreign exchange market, the pound was up 0.7 per cent against the dollar, reaching $1.6615 as some risk appetite returned for investors.

 

However, the pound did gain some pressure against the euro which overall looked stronger having gained 90 pence on good data from the continent.

 

In early trading, the euro was up to 90.12 pence, a gain of 0.1 per cent.  Overall, traders warn that the week ahead could be slightly more volatile on the market due to a shorter week in the US and Japan as they have national holidays.

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