Momentum ushers gold above $1,000/oz
Gold powered through the $1,000 per ounce psychological barrier on Tuesday, carried by a wave of pent-up technical momentum and dollar weakness, with some analysts eyeing last year’s record high at $1,030.80.
Some investors were also seeing the spike in gold as a warning signal to stock market bulls and were fretting about the result of central banks and governments pumping billions of dollars into banking systems to boost growth.
Spot gold rose to $1,007.45 an ounce, its highest since March 2008, when bullion touched the $1,030.80 record. It was trading at $1,001.75 an ounce by 1442 GMT (10:42 a.m. EDT), after briefly dipping below $1,000, and versus $993.85 an ounce late in New York on Monday.
U.S. gold futures for December delivery rose to $1,009.4 an ounce, before easing to $1,006.80 an ounce, versus Friday’s close at $996.70 an ounce before the U.S. long weekend.
“Gold’s probably the most technically traded financial instrument in the world,” analyst David Thurtell at Citigroup in London.
“Where can it go? If it closes through $1,010 and plus tonight, you’d have to think there would be a lot of very nervous shorts around that are getting close to covering, and then it really could pop and go up another $50 quite quickly,”
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But the sustainability of the precious metal’s rally above $1,000 an ounce, which also helped boost palladium and silver to 2009 highs, was in question payday loans with no fax.
UBS analyst John Reade said in a note to clients that gold options had moved sharply after breaking through $1,000.
“Today’s move in implied volatility suggests…that a scramble for upside gold options could lead the spot gold price higher,” he said.
“We are unconvinced that all the ingredients are in place for a sustained surge higher in gold,” he added.
Implied volatility is a measure of demand for options, which investors use to take advantage of, or protect themselves against, sharp movements in spot rates.
Spot gold has now made three attempts to rise and stay above $1,000, including Tuesday’s push. The market stayed above the key level for one day in February this year and three days in record-setting March 2008.
SUSTAINABLE?
Despite gold hitting $1,000, it is far from an inflation-adjusted record, which analysts at GFMS have put as high as $2,079 per ounce.
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