Gold value rises as dollar sinks
NEW YORK – Gold futures hit $1,000 an ounce for the first time Thursday, pushed past the benchmark by the sinking dollar and record crude oil prices.
The dollar fell below 100 yen during Asian trading Thursday, its weakest level against the Japanese currency in 12 years. The dollar also dropped to all-time lows against the euro.
After reaching $1,001 on the New York Mercantile Exchange, gold for April delivery dropped slightly to $999.70 by midmorning Thursday.
The price still doesn’t match the all-time high of $850 in 1980, if that price is adjusted for inflation. An $850 ounce of gold then would be worth $2,177 in today’s dollars.
The $1,000 an ounce price, though, is still a milestone and a telling sign that investors are continuing to abandon the dollar.
Gold has been pushing up against the $1,000 an ounce mark for weeks, mainly because of the weaker dollar. Interest rate cuts – and the prospect of more on the way – have weakened the currency so much that foreign investors can buy dollar-based commodities like gold and oil more cheaply.
Crude oil futures hit a record high above $110 a barrel Thursday, after first crossing that level Wednesday, also because of investors abandoning the weak dollar.
Investors have been expecting gold futures to rise to $1,000 as they watched the dollar spiral lower, said Scott Meyers, senior trading analyst with Pioneer Futures, a division of MF Global. Gold has been steadily creeping closer to the record after rising nearly 32 percent in 2007.
The dollar’s decline and the boost in the price of oil price merely added the extra push.
“We’re getting a scenario where commodities are the place to be today,” Meyers said. “With the weak dollar, it’s hard to be against them.”
Meyers declined to speculate on how high gold could go, saying, “to pick a top is a foolish game to play at this juncture.”