Gold tops $1,000 an ounce to hit 18-month high

Gold surges above $1,000 an ounce for the first time in nearly 18 months, propelled by sharp weakness in the U.S. dollar. See full story.

Contrarian-oriented gold investors are paying close attention to the reasons the gold skeptics are giving for not turning bullish. They are looking for clues as to what it will take to turn them into bulls and thereby weaken the contrarian foundation of any future rally in the price of gold. See full story.

Will the world run to the safety of gold as a form of international reserve currency, before the U.S. can force SDRs, its chosen alternative to the dollar, on the world? It might just be happening now.

A friend sends along this comment from Adrian Douglas:
I have recently described what is going on in the physical market to be the equivalent of a “run on the Bank of the Gold Cartel.” There are many factors that are leading to that conclusion and here are just a few:
— China is a confirmed large buyer of gold, along with Russia.

— Germany has apparently asked for its sovereign gold stored in New York to be returned.

— Hong Kong is repatriating its sovereign gold from London and will be the repository for gold to back the Shanghai Futures Exchange.

— Greenlight Capital sold $500 million of the GLD exchange-traded fund and bought physical bullion.— The European Central Bank gold sales have dried up to almost nothing.

— AnglogoldAshanti has reduced its hedges to less than one year of production.

— Central banks are net buyers of gold for the first time in more than 20 years.

— China has declared its right to default on commodity derivatives.

— China is encouraging its citizens to buy gold and silver.

— The contango on silver and gold has almost disappeared.

— Gold and silver movements from the COMEX warehouses are inconsistent with the delivery notices.

— Mine supply of gold continues to contract

http://www.freerepublic.com/focus/f-news/2334691/posts

Gold rallies above $1,000 an ounce as dollar weakens
Comex futures rise to 18-month highs; silver, copper rally
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AlertEmailPrintShare By Moming Zhou & Polya Lesova, MarketWatch
NEW YORK (MarketWatch) — Gold futures rose above $1,000 an ounce Tuesday, climbing to their highest level in nearly 18 months as a weaker dollar boosted the metal’s investment appeal. Silver and copper also rallied.

The thinly traded September contract rose as high as $1,006.90 an ounce on the Comex division of the New York Mercantile Exchange, the highest level for a nearby futures contract since March 18, 2008.

The most active December contract recently gained $6.40, or 0.6%, to $1,003.10 an ounce.

Day Ahead: Gold Rushes Past $1,000
Gold futures pushed through the key $1,000 per ounce level overnight but the reasons aren’t necessarily encouraging. Kelly Evan reports on your day ahead.

The London gold fixing, a global benchmark, rose to $1,000.75 Tuesday afternoon, also the highest level since March 18.

“The higher the price the higher the volatility, but this market is so concerned with inflation possibilities and dollar weakness that momentum is bringing more investors to the buy side,” said George Gero, a precious-metals trader for RBC Capital Markets.

In other metals, December silver futures rose 52 cents, or 3.1%, to $16.81 an ounce, after rising as high as $16.86. December copper futures gained 8 cents, or 3%, to $2.95 a pound.

Copper futures have more than doubled this year, while silver has gained nearly 50%.

The U.S. dollar fell to a new yearly low versus the euro and tumbled versus other major rivals, undercut as investors continued to show rising appetite for risk. See Currencies.

The dollar index (DXY 77.11, -0.91, -1.17%) , which measures the greenback against a basket of six major currencies, fell 1.2% to 77.217.

“Gold broke out from a pretty tight summer trading range mainly due to further concerns over the U.S. dollar’s status as a global reserve currency,” said Brian Hicks, co-manager of the $570 million U.S. Global Investors Global Resources Fund (PSPFX 7.54, +0.16, +2.17%) .

“Additionally, gold appears to be catching up to other commodity bellwethers, such as crude oil and copper.”

Gold has risen 13% this year, while crude has jumped nearly 60%.

Holdings in SPDR Gold Trust (GLD 97.87, +0.34, +0.35%) , the biggest gold exchange-traded fund, stood at 1,077.63 metric tons Friday, slightly lower from a day ago.

It’s unclear how sustainable the rise above $1,000 an ounce will turn out to be, wrote analysts at Commerzbank in a note to clients.

“The last two times when it occurred — in February this year and in March last year — the price increase was only temporary and ended in a massive correction below the $900-an-ounce level,” they said.

“Seasonal trends seem to make this less likely though, as physical gold demand typically picks up around autumn and winter time.”

Gold prices typically rise in September, a MarketWatch analysis of the historical record shows, as the start of holiday seasons in the world’s biggest gold-consuming countries tends to drive up demand. See full story.

In other metals, October platinum rose $30.90, or 2.5%, to $1,290 an ounce, and December palladium gained $2.95, or 1%, to $298.95 an ounce.

http://www.marketwatch.com/story/gold-briefly-hits-1000-may-move-higher-2009-09-07

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