Will the failing status of the dollar spur gold as investors seek safe-haven?
*Financial Times, by Chris Flood, March 26, 2009:
"Oil prices staged a rebound on Thursday while base metals advanced
and gold consolidated amid a growing sense of cautious optimism that
the huge range of stimulus measures introduced by governments could
stop the global economy from sliding from a recession into a
long-lasting depression.
In energy markets, ICE May Brent rose $1.11 to $52.86 a barrel while
Nymex May West Texas Intermediate added 75 cents at $52.53 a barrel,
recovering most of Wednesday’s fall which followed the latest US weekly
inventories.
US crude stocks rose 3.3m barrels last week, reaching a sixteen year
high, following a rise in imports and a small dip in refinery
utilisation.
However, the impact of the rise in total crude inventories was blunted
by a fall in crude stocks at Cushing, Oklahoma, the delivery point for
WTI, which dropped 2.2m barrels.
Gold traded at $934.70 a troy ounce, moving in a very narrow range
between a low of $931.40 and a high of $938, after ending trading in
New York on Wednesday at $933.15.
On Wednesday, gold spiked to a high of $940.00 after the dollar
weakened in reaction to comments from Tim Geithner, US Treasury
secretary who said he was 'quite open' to China’s proposals to make
greater use of International Monetary Fund special Drawing Rights in
the global financial system.
'If the US Dollar’s status as the world’s reserve currency is seriously
challenged, gold is likely to benefit significantly as investors could
seek bullion for its safe-harbour qualities,' said James Steel,
precious metals analyst."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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