Just imagine!Gold closes at a 12-week high, up $40 on month
Dollar weakness, U.S. economic data fuel broad metals rally
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Last Update: 4:09 PM ET Nov 30, 2006
SAN FRANCISCO (MarketWatch) -- Gold futures rallied to a 12-week high Thursday to end the month nearly 7% higher as U.S. data renewed expectations that the economy is poised for a growth slowdown, prompting the dollar to touch a 14-year low against the British pound and a 20-month low against the euro.
"Today's move puts traders of other assets on notice that dollar values are eroding at a substantial clip and that the majority of economic news coming at the markets this week has been negative for the greenback," said Jon Nadler, an investment-products analyst at bullion dealers Kit.com, in e-mailed commentary.
Gold for December delivery closed up $11.40 at $646.90 an ounce on the New York Mercantile Exchange. It touched $648, its best level since Sept. 5, after losing more than $5 in the past two sessions. The benchmark contract tallied a gain of $40.10, or 6.6%, from the month-ago closing level of $606.80.
Trading volume in the February gold contract was higher, however. That contract added $11.10 to close at $652.90 an ounce.
On Thursday, the dollar dropped against all its major rivals, especially sterling, on continued concerns the U.S. economy will grow at a rate more slowly than other countries. See Currencies.
"Unlike previous times, gold has not sold off after hitting key resistance around $640," said Peter Grandich, editor of the Grandich Letter, in an e-mailed comment. "This suggests a powerful move up is near and a run to $700 is likely."
A report Thursday showed business activity in the Chicago region slowed to its lowest level in more than three years in November. See full story.
There was further support for gold in data showing core inflation rose slightly faster than expected, at 0.2%, in October. See full story.
Meanwhile, oil prices extended their gains to a high above $63 a barrel following declines in U.S. petroleum supplies last week as well as to forecasts for cold weather across much of the nation. See Futures Movers.
"The threat of oil-driven inflation and bearish sentiment toward the dollar will continue to draw investors towards gold and its unique properties as a store of value," said James Moore, analyst at TheBullionDesk in London, in a note to clients.
Other metals joined in gold's rally.
December silver futures closed up 35.9 cents at $13.925 an ounce, ending 13.5% above the close on Oct. 31. March silver finished up 35.5 cents at $14.115, on higher trading volume.
January platinum rose $24.30 to end at $1,176.70 an ounce, up 7.7% for the month. December palladium added $7.05 to close at $329.35 an ounce, up 2% from a month ago. March palladium added $6.85 to close at $334.35, on higher trading volume.
And December copper rose 4.35 cents to end at $3.1715 a pound, down 5.3% from a month ago. March copper added 4.05 cents to close at $3.1955.
On the supply side, gold was down 3 troy ounces at 7.49 million troy ounces as of late Wednesday, according to Nymex data. Silver was down 218,406 troy ounces at 108.2 million troy ounces and copper stockpiles were up 84 short tons to stand at 30,948 short tons.
Shares of metals-mining companies closed higher amid strength in metals futures.
A 6.4% rise in shares of Goldcorp (GG : goldcorp inc new com
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4:42pm 11/30/2006
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GG31.17, +1.87, +6.4%) helped lead the Philadelphia Gold and Silver Index (XAU : phlx gold silver index capital-weight
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4:46pm 11/30/2006
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XAU149.28, +5.19, +3.6%) up by 3.6% to close at 149.28. The CBOE Gold Index (GOX : CBOE Gold Index
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4:49pm 11/30/2006
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GOX158.59, +5.33, +3.5%) rose 3.5% to close at 158.59 and the Amex Gold Bugs Index (HUI : amex gold bugs index equal-$ weight
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4:34pm 11/30/2006
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HUI355.54, +12.18, +3.5%) ended at 355.54, up 3.6%.
The DJ Wilshire Nonferrous Metals Index ended at 6,008.98, up 0.7%. The DJ Wilshire Industrial Metals Index closed up 0.6% to 3,357.97 from the previous session and the DJ Wilshire General Mining Index tacked on 2% to end at 1,419.23.
Myra P. Saefong is a reporter for MarketWatch in San Francisco.