Gold Jump As Dollar Drops; Silver Hits 30-Yr Peak, But
Posted 10/13/2010 06:30 PM ET
27-month highs and gold returned to record peaks on
Wednesday, propelling a widely watched commodity index
to a two-year high as the dollar weakened again on expectations
that the U.S. Federal Reserve will soon start a new
round of monetary easing.
rose too, aided by the falling dollar and higher crude
imports by China.
fell as traders took profits after a powerful rally
lifted the market by about 20% over the last four sessions.
Reuters-Jefferies CRB index rose more than half a percent
to above 300 points for the first time since Oct. 14,
2008. At that time, markets were coming off their peaks
before the worst recession in decades.
The CRB has
risen 5% over the last month as the dollar tumbled about
6% on concern the U.S. Federal Reserve would embark
on a new round of government debt purchases to boost
the economy. Many believe the program, called quantitative
easing or "QE2" in financial markets, could
view the CRB's upward trajectory as a sign commodities
are headed for a new "supercycle" or multiyear
rally similar to the boom that ended in 2008. But others
predict a sharp sell-off if inflation does not kick
in as expected.
CRB is looking all vertical now and so are many commodities
and this is great for market bulls, but the truth is
we are close to exhaustion on many of these rallies,"
said Shawn Hackett, president at Hackett Financial Advisors,
a money manager in soft commodities in Boynton Beach,
the excitement over the QE ends, it's going to be hard
to sustain all these, without the right supply-demand
fundamentals in place."
said near-term easing measures looked more likely this
week after they read minutes of the Sept. 21 policy
meeting, which the Fed released on Tuesday.
futures' most-active contract, December, rose 3.10 cents
to settle at $3.8205 per pound, the highest close for
a benchmark third-month position since July 7, 2008.
say this has almost everything to do with the U.S. dollar,"
said Jeff Pritchard, a copper broker and analyst at
Altavest Worldwide Trading in Mission Viejo, Calif..
three-month copper contract rallied to $8,430 a metric
ton, its loftiest price since July 2008, before ending
up $12 at $8,362.
futures' current benchmark contract, December, settled
up $23.80, or 2%, at $1,370.50 an ounce after surging
to a record high near $1,375.
known as the poor man's gold, hit a 30-year peak to
approach $24 an ounce.