Commodities
Dollar Weakness Helps Lift Gold
Simon Constable
05/05/08 - 03:44 PM EDT
Near-term gold prices in the U.S. jumped Monday as the dollar pulled back.
Benchmark bullion futures rose $16.10 to close at $874.10 an ounce on the Comex division of the New York Mercantile Exchange. The streetTracks Gold Shares(GLD Quote - Cramer on GLD - Stock Picks) exchange-traded fund, which holds bars of gold, was gaining 1.6%.
The value of gold has pulled back substantially in recent weeks after reaching an all-time high of around $1,030 March 17 at the height of the banking crisis when Bear Stearns(BSC Quote - Cramer on BSC - Stock Picks) was rescued by JPMorgan Chase (JPM Quote - Cramer on JPM - Stock Picks) after a near-collapse. At least part of the story in the retreat in gold prices has been a strengthening U.S. dollar, the value of which tends to move in the opposite direction to that of gold.
The other piece of the tale has been the liquidation of gold holdings by the streetTracks Gold Shares. The fund has seen redemptions of about 84 tons, a large quantity for the relatively illiquid bullion market, since mid-April, as investors have grown more sanguine about the problems plaguing the credit markets.
As for the precious metals patch, shares of Eldorado Gold(EGO Quote - Cramer on EGO - Stock Picks) and Kinross Gold(KGC Quote - Cramer on KGC - Stock Picks) were both ahead more than 4%, buoyed by the rallying gold price.
In the currency markets, one euro was buying $1.5496, up from $1.5414 on Friday. The dollar was buying 104.76 Japanese yen, down from 105.20 yen previously. The British pound was selling for $1.971 vs. $1.974.
The CurrencyShares Euro Trust(FXE Quote - Cramer on FXE - Stock Picks) and the CurrencyShares Japanese Yen Trust(FXY Quote - Cramer on FXY - Stock Picks) were both up 0.5%. The CurrencyShares British Pound Sterling(FXB Quote - Cramer on FXB - Stock Picks) was off 0.2%.