Gold hits record, extends gains to 9th day
Spot gold hit a record high above USD 1,589 on Thursday, buoyed by a sharp drop in the dollar after Moody's warned the US may lose its top credit rating, the possibility of more Federal Reserve stimulus and Europe's deepening debt crisis.
July 14, 2011 / 15:12 IST
Spot gold hit a record high above USD 1,589 on Thursday, buoyed by a sharp drop in the dollar after Moody's warned the US may lose its top credit rating, the possibility of more Federal Reserve stimulus and Europe's deepening debt crisis.
Spot gold rose to a record of USD 1,589.56 an ounce, before easing to USD 1,584.51 by 0609 GMT. Gold was on course for its ninth consecutive day of gains, matching a similar winning streak in 2006.US gold also hit a record at USD 1,590.80 an ounce. It was trading at USD 1,585.30, little changed from the previous close.Sovereign debt concerns spread from the euro zone to the United States, as Moody's threatened to cut the US sovereign credit rating as debt talks stalled in Washington."There is a lot of capital flight," said a Singapore-basedtrader."Lacking a really reliable destination, a lot of the funds leaving the bonds market are going into precious metals on the notion that their value will be retained even if policymakers are pressured to go to further extremes to work against contagion." Uncertainties around the US debt talks, together with Federal Reserve Chairman Ben Bernanke's comment on the potential for further monetary easing, battered the dollar, helping support commodities. The ongoing euro zone debt crisis added to gold's lustre. Fitch Ratings on Wednesday downgraded Greece deeper into junk territory, citing the absence of a new and fully funded financing program for the country. "Gold flourishes when there is uncertainty on the macro side, and across the globe there are quite a few problematic hot spots," said Xinyi Chen, an analyst at Barclays Capital. Gold prices are likely to refresh the record highs in the short term, with the immediate target at USD 1,600 within a stone's shot, traders and analysts said."There is so much disquiet about bond market that it is likely to keep investors interested in precious metals," said the Singapore-based trader, while warning that a price breakout could trigger greater volatility.The Relative Strength Index, or RSI, on spot gold hovered around 70, seen as a technical sign that the market is overbought.Technical analysis suggested a bullish picture. Spot gold is likely to rise to USD 1,613 an ounce, said Reuters market analyst Wang Tao. Spot silver rose to USD 38.61 per ounce, the highest since May 31, before trading up 0.7% at USD 38.52, tracking gains in bullion and extending the 5.6% rise in the previous session.US silver gained 1% to USD 38.56. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
