Gold steadies as traders weigh outlook for Fed rate cuts
Bullion traded near $2,626 an ounce in thin trading after closing 1.1% higher on Friday.
Despite a relatively stable day for stocks on Wall Street, gold futures continued its upward spiral on Friday trading above 1,850/oz after touching a new record high of $1,881/oz in morning trade.
A string of bad news about the US economy including declines in manufacturing activity, higher than expected retail inflation and higher jobless numbers on top of deepening fears about the soundness of Europe’s financial system, sent investors scurrying for the safe haven of gold and silver.
So far this year gold has gained more than 30% and silver, trading at $42.20/oz on Friday, has soared 40%.
Gold is up more than sevenfold from its August 1999 low of $251/oz shortly before global central banks started limiting bullion sales. Many observers believe that decision was the turning point for gold although it would take almost another decade before breaching the $1,000/oz level.
Adjusted for inflation gold remains below its 1980 peak of $850/oz which translates to around $2,400 in today’s dollars.
Most metals traded higher on Friday, with silver for September delivery adding $1.50, or 3.7%, to $42.22 an ounce. Silver hit a high of $47 in April this year in contrast to a value of only $5/oz for most of the 1990s and the early part of the last decade.
MarketWatch quotes strategists at Capital Economics: “Venezuela is running desperately low on dollars, suggesting that the repatriation of the gold reserves would be a precursor to their sale. We suspect that Venezuela would find some very willing buyers elsewhere given the continuing high demand for gold as a safe haven.”
