GOLD PRICE NEWS – After hitting a new all-time high of $1,509 per ounce early Thursday morning, the gold price moved back near unchanged at $1,503.50. The price of gold has moved to a series of record highs, rallying for six consecutive trading sessions on the back of persistent weakness in the U.S. dollar. This morning’s weak jobless claims data further pressured the dollar as investors continued to press their bets that Chairman Bernanke and the U.S. Federal Reserve will stock to their ultra-dovish stance at next week’s Federal Open Market Committee meeting.
The U.S. Dollar Index is trading at fresh multi-year lows at 73.96 this morning, boosting the gold price as well as its sister precious metal, silver. Silver prices backed off their morning highs, but still gained 1% at $45.74 per ounce heading into the open on Wall Street. The broader commodity complex is also showing strength as oil, copper, and agricultural products all posted price gains.
The share prices of gold and silver producers were set to open higher as strong silver and gold prices – combined with a strong earnings report from Newmont Mining (NEM) – gave them a lift. Newmont, the largest U.S.-based gold producer in the world, announced first quarter earnings this morning of $1.04 per share versus market expectations of $1.10 per share. The gold miner produced 1.3 million ounces of gold in the first quarter and 57 million pounds of copper. Shares of NEM advanced nearly 1% in pre-market trading.
Canaccord Genuity boosted its ratings this morning on two silver companies, Silver Wheaton (SLW) and Hecla Mining (HL). SLW was raised to “buy” from “hold” by analyst Steve Butler, who has a 12-month price target of $57 on the shares. Butler also moved HL from a “hold” to a “buy” with a 12-month target of $12.00 per share.
As central banks across the globe move to tighten monetary policy, investors and traders are betting that the U.S. Federal Reserve will remain on hold. Widening interest rate differentials have emboldened investors to initiate dollar carry trades, whereby dollars are borrowed – shorted – with the proceeds moved into higher yielding assets. Commodities, stocks, gold, and silver have all soared as a result.
JP Morgan’s senior metals and mining analyst, John Bridges, in a research note this morning, commented, “We continue to feel gold and the equities have a role in portfolios as a risk modifier. Silver is a more levered way to achieve precious metals exposure due its higher beta. We feel portfolios will benefit from having a core long position in the precious metals space until the political and financial uncertainty declines.”
Richard Russell, editor of the Dow Theory Letters , who has been bullish on the gold price for the last decade and has implored his subscribers to purchase gold described the price action of the U.S. dollar his daily letter yesterday: “The dollar is doing just what the Fed wants it to do — it’s sinking, sinking and sinking more. Sadly, the great American public doesn’t understand what’s happening, and if they were told they couldn’t care less. Of course, what the public does notice is the painful result of the dollar’s bear market. The result is seen every time Joe six-pack and his wife hit the neighborhood super-market. The rising prices are a shocker.”
The veteran newsletter writer exclaimed, “The great gold rush of 1849 opened up the American West. This gold rush of the early 2000′s will open up the eyes of Americans to the danger of the Federal Reserve and fiat money.”
(Source: http://www.goldalert.com/gold-price-sets-fresh-record-high-of-1509/)
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