From: Biniam Tekle (firstname.lastname@example.org)
Date: Wed May 12 2010 - 15:37:27 EDT
May 12, 2010, 2:40 p.m. EDT
Gold futures hit new record, other metals rallyPalladium rises nearly 3%;
By Claudia Assis & Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures surged to a fresh record
Wednesday as nervousness surrounding the European rescue package and its
effects in the global economy showed no signs of abating.
Gold for June delivery, the most active contract, gained $22.80, or 1.9%, to
$1,243.10 an ounce on the Comex division of the New York Stock Exchange.
That's the highest settlement for a most-active contract since gold futures
started trading in 1974. Silver rode in the coattails of gold's success to
trade at its highest price since March 2008.
"Gold is the tangible currency of last resort," said trader and senior
strategist Adam Klopfenstein of Lind-Waldock in Chicago. It is not in a
bubble as the fundamentals and market sentiment support the rise in prices,
"Gold is reflecting exactly what's going on ... this is not a situation when
one or two days of data points will change things," Klopfenstein added.
The June contract hit an intraday high of $1,249.20 an ounce in electronic
trading after the close of floor trading, according to FactSet.
The May contract, the thinly traded front-month contract, added $22.80 to
settle at $1,242.70 an ounce.
Gold futures rallied on Tuesday to settle at $1,220.30, topping a previous
Dec. 3 record settlement for a most-active contract.
"Investors' concerns are not going to dissipate in the medium term," said
Natalie Dempster, a director of the World Gold Council, an industry group
comprised of gold miners.
Many investors fear that Europe's rescue package of nearly $1 trillion will
bring about inflation by injecting liquidity into the markets, she said.
But not all investors were confident gold can keep adding to gains.
Walter Zimmerman of United ICAP said his firm views "the current rally in
gold as a short-term momentum trade for aggressive traders."
"(W)e do not see current gold prices as an attractive entry point for
longer-term investors," he said in emailed comments. "Gold was an
attractive, undervalued investment back in the late 2008."
His technical analysts suggests "there may be only a couple more weeks of
upside left in gold before a major corrective retreat ensues."
Investors are weighing whether the European Union's plan will be enough to
stop the Greek debt crisis from spreading to other nations in the euro zone,
such as Spain and Portugal.
Spain's government on Wednesday announced a series of measures to lower its
deficit, which reached more than 11% of gross domestic product in 2009.
Gold is traditionally seen as a relative safe asset that keeps its value,
and investors tend to buy the metal at times of economic and financial
The dollar index (INDEX:DXY) , which tracks the performance of the greenback
against a basket of other major currencies, rose 0.4% to 84.85.
The SPDR Gold Trust (NYSE:GLD) , the largest exchange-traded fund backed by
gold, rose 1.1%.
Gold has also reached a record in euros, at nearly 980 euros a troy ounce.
It is "probably only a matter of time" before the thousand-euro mark is
broken, "given market players' high need for security at the moment,"
analysts at Commerzbank said.
Meanwhile, other several metals rode on gold's record, with silver and
palladium leading the way.
Silver at '08 high
Silver for July delivery, the most active contract, added 37 cents, or 1.9%,
to settle at $19.66 an ounce. That's the highest price for a most-active
contract since March 14, 2008, according to FactSet Research.
Palladium for June delivery added $15.25, or 2.9%, to $547.45 an ounce.
Platinum for July delivery advanced $46.50, or 2.7%, to finish at $1,747.30
Copper sat out the rally. Copper for July delivery fell 2 cents, or 0.6%, to
$3.188 a pound.
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