Spot gold remained sharply higher at $1,017.65 an ounce into late New York dealings, compared with $1,005.90 on Tuesday. Wednesday's high of $1,020.50 an ounce was last reached in March 2008.If the economy is doing so well (another happy-face Wall Street analyst type says we're in a V-shaped recovery) then why is the smart money not on our money, but assets like gold, a place where people turn to in bad financial conditions?
In New York, December gold finished $13.90 higher, a 1.38 percent gain, at $1,020.20 an ounce on the COMEX division of the New York Mercantile Exchange. The contract reached a high at $1,023.30 an ounce, unseen since July 2008.Gold's rally to levels unseen in 14 months primarily resulted from heavy U.S. dollar selling against the euro.
"Gold's rise is related to the weaker dollar, which is a function of risk aversion coming out of the market. We had strong dollar buying for months because of the credit crisis. As financial markets give every impression of stabilizing, that is unwinding. A byproduct is much higher gold prices,'' said HSBC metals analyst and senior vice president, James Steel.
The precious metal could be building up for an assault on its previous all-time high above $1,030 an ounce, set in March 2008 in the spot market, traders said. U.S. gold is eyeing the $1,033.90 per ounce prior record high on gold's continuation chart.
Something's not adding up here, of course, and the answer is that we've got a lot of problems coming.
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