Gold rally continues as US dollar comes under further pressure
November’s gold rally does not appear to be waning as the yellow metal climbed a further $15 this morning, rising to yet higher records. December Globex futures hit $1,133 in electronic trading on the CME this morning, over $100 higher than the 2008 record which preceded the yellow metals remarkable rally in the second half of 2009.
For months, the gold market has persistently fed of dollar
weakness; this morning’s latest push to new highs was helped by further
dollar declines. The US Dollar Index, which reflects the relative
strength of the greenback against a basket of the other six major
currencies, dropped a further 0.5% this morning.
The dollar came under pressure overnight in Asia as reports
suggested that China may not loosen its grip on the Yaun as many forex
speculators had hoped. China has supported its exports into the US
through the tight control of its currency; the Yuan has remained
relatively unchanged against the dollar for over a year. Speculative
hopes that China would allow its currency to appreciate appear to have
been dashed following a series of ‘concerned’ comments from prominent
sources in the People’s Republic.
Some may view the speculation as political posturing ahead of Barrack Obama’s first visit to Beijing as President.
In recent weeks, some western economies have been showing early
signs of recovery with both the US and Eurozone turning back into
positive GDP growth in recent weeks. Meanwhile, commodity and forex
markets have shown signs of the growing influence among emerging
economies. Both China and India are becoming more prominent voices in
the global economy, particularly in reference to there outlook for
their substantial US Dollar reserves.
At the turn of the month, it was India’s turn to display its
influence on world markets. India announced it had increased its gold
reserves by 200 million ounces through a direct purchase from the IMF
(International Monetary Fund) sparking a substantial surge in the Gold
price.
With gold prices making persist gains many analysts and commentators now see $1,200 gold in 2009 as a real possibility.
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