Precious Metals Market Report by Bill Musgrave – American Gold Exchange
Gold surged 2.1% to close at a six-week high above $1,185 on speculation that OPEC may cut production, boosting demand for the metal as a hedge against higher oil prices.
Gold initially dropped in early trade after reports that U. S. consumer sentiment hit a seven-year high last month and retail sales rebounded, prompting the dollar to rise. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.
Momentum quickly reversed, however, as the dollar weakened and oil prices jumped 2.4% on reports that OPEC may curb oil output when it meets in two weeks. Oil fell below $80 a barrel yesterday for the first time in four years because of a faltering global economy and rising U.S. shale oil production. Gold acts as a hedge against higher oil prices. Gold was also propelled by technical buying, as rising prices triggered a short-covering rally that pushed prices higher still.
Deutsche Bank said today that the Swiss gold referendum, scheduled for November 30, has a “narrow but clear lead,” according to Zero Hedge. If the measure passes, Switzerland will be required by law to keep 20% of official reserves in gold. Its national bank would be forced to purchase 1,500 tons of gold over the next five years, which would support global gold prices.
The other precious metals mostly tracked gold higher, with silver leaping 4.4% and platinum climbing 1.2% while palladium barely edged up.
At the Comex close: December gold surged $24.10 to $1,185.60; December leaped 69 cent to $16.31; January platinum climbed $14.10 to $1,213.10; and December palladium edged up 50 cents to $771.35 an ounce.
