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.”
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