Gold Futures Move Up Before Market Opens

Forex Info Center reports that yesterday November 8, 2010 the dollar, $USD, interest rates, $TYX, and commodity prices, DBC, rose while US stocks, VTI, declined modestly. Gold, $GOLD, prices reached a new high. Federal Reserve Governor Kevin Warsh said he is concerned that the Fed’s expansion of record stimulus may spark too much inflation and fail to aid economic growth. Dallas Fed President Richard Fisher worried that the Fed will be monetizing the federal debt using QE II while fiscal and regulatory policies are needed to stimulate the economy. The S&P 500 index decreased.

Pratima Desai of Reuters reports Gold Hits Record high On Euro Zone Debt Fears: Gold surged to a record high for the fourth day running on Tuesday, fueled by renewed concern over high sovereign debt in euro zone countries such as Ireland and Greece and inflationary pressures.

Silver touched $28.46 an ounce, the highest since March 1980, palladium saw $728.22 an ounce, its highest since April 2001. Platinum hit $1,790 an ounce its highest since July 2008.

Spot gold hit $1,422.30 a troy ounce. The precious metal was bid at $1,418.80 an ounce at 1256 GMT from $1,409.09 late in New York on Monday. U.S. gold futures also hit a record $1,422.10 an ounce.

“We have a combination: inflation fears, currency market uncertainty, fears about the financial strength of some countries,” said Alexander Zumpfe of Heraeus Metals.

Zumpfe said remarks by World Bank President Robert Zoellick that leading economies should consider readopting a modified gold standard, had also helped reignite interest in the precious metal.

Worries about price pressures were reinforced last week by the U.S. Federal Reserve, which announced further monetary policy easing to help boost economic growth in the world’s largest economy, the United States.

“Inflation concerns and euro zone debt worries have helped accentuate the surge this week initiated by the weakness in the dollar,” said investment bank Fairfax in a note.

News that the Fed would buy back $600 billion of U.S. government bonds initially weakened the dollar and propelled commodity prices higher, particularly gold, which has gained nearly 30 percent this year so far.


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