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Fundamental Precious Metals: Gold rebounds as the dollar plunges
Written by article default Wednesday, 13 October 2010 08:59
The yellow metal rebounded on Wednesday trading as the dollar slipped against a basket of major currencies, as depicted by the dollar index which fell to a low of 77.07 compared with the day's opening price at 77.26, enhanced demand on the metal as alternative investment.Spot gold is trading at $1345.08 an ounce, recording a high of $1355.17 and a low of $1344.57.
Yesterday, the dollar pared its earlier advance against majors after the Fed comments showed that policy makers are ready for introducing another stimulus to spur the economy.
Actually, the dollar's fall the prior day gave the chance for commodities to advance; S&P GSCI added 5.03 points to 570.80 and RJ/CRB Commodity pushed up 1.46 points to 297.83, where oil rebounded to a high $82.55 a barrel as a result of the decline in dollar and advance in Asian shares.
Bernanke will speak on monetary policy objectives and tools in on Friday, where he mentioned earlier this month that after the success of the first-round stimulus the economy needs another round to give it another boost.
The Fed announcements highlighted the possibility of having high inflation rate in the coming period which may also help gold to rise as a hedge against accelerating prices.
US Import price index is due today where expectations refer to a slid to 3.8% in the year ending September from 4.1%, while the monthly reading shows a decline to -0.2% from 0.6%.
The previous day, gold shed $3.40 or 0.25% an ounce to close at $1350.13 an ounce. Gold price was set in London on Tuesday at $1348.50 per ounce declining from $1343.50 during the AM fixing.
On the physical side, demand from India, the world's biggest gold buyer, and other Asian economies is strong amid festival season that will end in November.
Among other precious metals, platinum surged to $1694.80 from the day's opening at $1690.20, palladium edged up to $591.00 from $588.70, and silver plunged to $23.54 from 23.47, as of 07:50 GMT.