Gold prices soar to new heights on weaker dollar

AP News
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Posted: Oct 13, 2010 3:49 PM
Gold prices soar to new heights on weaker dollar

Investors pushed gold prices to new heights Wednesday as a weaker dollar prompted them to shift money into assets perceived as safer risks.

Gold for December delivery settled up $23.80 at $1,370.50 an ounce, the latest in a recent series of record highs. Some analysts believe gold could top $1,400 an ounce by year's end and perhaps climb higher next year until economic conditions improve.

Investors are seeking safety in their holdings because they are concerned about what may be next for the economy as well as the outcome of next month's election, CPM Group analyst Carlos Sanchez said.

Many are speculating about what steps the Federal Reserve may take to help stimulate the economy and what impact that will have on the dollar. More clarity is expected after the Fed's meeting in early November.

In recent weeks, most commodities have benefited as the dollar remained weaker than other currencies. Since commodities are priced in dollars, they are more of a bargain for traders who buy them with foreign currencies.

Other commodities also gained Wednesday following strong corporate earnings reports from JPMorgan Chase & Co., Intel Corp. and railroad operator CSX Corp. That gave traders some hope about improving demand for industrial metals and energy products.

The improving commodity prices boosted the stock markets, especially mining, industrial and materials companies. The Dow Jones industrial average, Standard & Poor's 500 index and the Nasdaq composite index all were higher in afternoon trading.

In December metals contracts, silver hit its highest level in decades, adding 78.5 cents to settle at $23.932 an ounce. Copper added 3.1 cents to settle at $3.8205 a pound and palladium gained $13 to $593.65 an ounce.

January platinum settled at $1,707.40 a pound, up $24.10.

Benchmark crude for November delivery rose $1.34 to settle at $83.01 a barrel on the New York Mercantile Exchange.

In other Nymex trading in November contracts, heating oil added 3.82 cents to settle at $2.3007 a gallon, gasoline gained 4.22 cents to settle at $2.1661 a gallon and natural gas rose 6.7 cents to settle at $3.696 per 1,000 cubic feet.

Grains fell on the day. Corn for December delivery fell 9.75 cents to settle at $5.6925 a bushel. November soybeans slipped 2 cents to settle at $11.7650 a bushel and December wheat lost 7.25 cent to $7.0275 a bushel.