Gold Again at Multiyear High
Gold showed continued strength Wednesday following the decision by the
Federal Reserve
a day earlier to cut key interest rates.
December-dated contracts were recently trading at $730.40 an ounce, up $6.70 from when the previous session ended Tuesday, but off its intraday peak of around $735 -- a level last seen in 1980.
The bullion exchange-traded funds, which hold inventories of gold, were slipping. The
streetTracks Gold Shares
(GLD)
was off 0.3%, and the
iShares Comex Gold Trust
(IAU)
eased 0.2%.
"The
half-point interest rate cut proved extremely bullish for gold and the majority of the commodities spectrum," writes James Moore, an analyst at
TheBullionDesk.com
TheStreet Recommends
in London, in a research report.
He also notes that bullion holdings by the streetTracks Gold Shares ETF hit 575.57 tons, an increase of 61 tons, or $1.4 billion, over the past month.
Other news out indicating a drop in consumer prices during August did little to stem the bullish sentiment for gold. Some investors buy bullion as a long-term hedge against the portfolio-withering effects of inflation.
From a technical analysis perspective, gold is now in relatively uncharted territory, Moore adds. The previous highs of above $800, made in 1980, were so short-lived and so long ago that they represent only marginal chart resistance, at best, he says.
Elsewhere, copper contracts were tacking on 10 cents at $3.55 a pound, while silver prices were ahead 14 cents at $13.07 an ounce.
In the precious metals patch, the Amex Gold Bugs Index, which tracks the value of precious metals stocks, was rising 2.2%, pulled up in part by a 4% gain in
Randgold Resources
(GOLD)
.
Freidman Billings Ramsey initiated coverage of recycler
Horsehead Holding
(ZINC)
with an outperform rating and a stock price target of $27 a share. The stock recently traded at around $19.
In the agriculture sector, coffee prices were down 1% at $1.29 a pound. Wheat prices were losing 1.6% at $8.55 a bushel.
Corn was falling 0.6% at $3.50 a bushel, while frozen concentrated orange juice was edging ahead 0.3% at $1.28 a pound.
