Gold taps more records, nears $1,225
Admin - Dec 02, 09
http://www.geopoliticalmonitor.com/gold-taps-more-records-nears-1225-3115
December 2, 2009 (MarketWatch) - Gold futures climbed to more record levels in electronic trading Thursday in Asia, edging closer to $1,225 an ounce as investment demand continued to strengthen.
"Gold continues to defy gravity and for good reasons: The shift out of fiat currency such as the dollar is happening at a swifter pace than most imagined it would," said Kevin Kerr, president of Kerr Trading International.
"We are hearing rumors that Germany will be coming in soon to purchase gold, and while China is talking about gold being in a bubble, they are most likely getting ready to increase their reserves from their tiny 2% of reserves to at least 4% in gold," he said.
Gold for December delivery climbed as high as $1,224.70 an ounce on Globex, yet another fresh record. It was up $11.50 at $1,223.50 by the early afternoon in Tokyo.
December gold had earlier closed up $12.90, or 1.1%, at $1,212 an ounce in Wednesday trading on the Comex division of the New York Mercantile Exchange.
Gold futures on Comex have soared 37% this year, and have made gains in 17 out of the past 20 weeks. They advanced in all but two trading sessions in November.
"The most recent move in the gold price builds on the sharp rise that started in November driven by the announcement that India will buy 200 metric tons ($7 billion) of [International Monetary Fund] gold," Daniel Wills, senior analyst at ETF Securities said in a statement offered to media.
"Many market participants view this purchase as just the tip of the iceberg, with China, Russia and other central banks also indicating their intention to build up gold holdings as part of their strategy to diversify away from the U.S. dollar," he said.
"Gold is being viewed as one of the primary alternatives to holding paper currency, and the gold price has become a key barometer of investor confidence in government policies," he said.
At the same time, Dubai's debt woes have helped spur the realization that the danger for investors is not just that companies or banks could fail, "but that eventually entire states/nations may be at risk on the ground of escalating debt, escalating budget deficits," said Martin Hennecke, associate director at Tyche Group Ltd.
Myra P. Saefong is MarketWatch's assistant global markets editor, based in Tokyo.