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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.666389 |
| Euro to US Dollar | 1.508068 |
| Japanese Yen to US Dollar | 0.011505 |
| Canadian Dollar to US Dollar | 0.951837 |
The price of gold closed above $900 an ounce for the first time today as the dollar weakened amid worries about slowing economic growth in the United States.
And gold bulls believe $1,000 an ounce isn't far off.
Gold settled at $903.40 an ounce. The price had peaked earlier in the session at $907.30.
Gold briefly hit $900.10 an ounce on Friday before closing at $897.70.
With today's close, gold is up 7.8% for the month today after rising 32% in 2007.
Gold's rise wasn't hurting the U.S. stock market today. The Dow Jones Industrial Average ($INDU) was up more than 150 points to 12,758 this afternoon after dropping nearly 247 points on Friday and suffering its worst start to a year since 1991.
With today's gains, however, the Dow is down more than 4.2% this month.
Gold's rise comes as investors speculate that the Federal Reserve will cut short-term interest rates at its Jan. 29-30 meeting.
That's pushing the U.S. dollar down against other currencies, particularly the Japanese yen and the euro. The dollar is down 1.8% against the euro this month and 3.4% against the yen.
"It's a reflection of market sentiment: Gold is a hedge against uncertainty, and, right now, it's the best bet," Carlos Sanchez, a precious-metals analyst at CPM Group in New York, told The Associated Press on Friday. "None of the other investment options look that great, and gold does."
Traders have been investing heavily in gold as they search for a safe haven amid concerns over the world's biggest economy. A weak dollar has made gold more affordable for buyers using stronger currencies.
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HSBC Securities and Morgan Stanley predicted the U.S. central bank will reduce its benchmark rate by half a percentage point this month to 3.75% after Fed Chairman Ben Bernanke suggested cuts may be necessary to guard against an economic slowdown. Gold was moving modestly higher in 2007 until the Federal Reserve began to cut interest rates again in September. From Aug. 16, a day of wild stock market until the end of the year, gold jumped more than 26% to $838 an ounce. The U.S. dollar, meanwhile, fell nealry 8% against the euro.
"Concerns of a recession will keep pushing up gold prices," Sanchez said. "Depending upon what happens in the economy and in the Middle East, we could see gold testing $1,000 an ounce, maybe even this quarter."
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The price jump helped gold stocks move higher today. The Amex Gold BUGS Index ($HUI.X) was up 2.4% to 486 today. Newmont Mining (NEM, news, msgs), one of the biggest gold-mining companies, was up 3.5% to $56.64 this afternoon after rising 1.5% to $54.72 Friday. Since the end of 2006, the stock is up nearly 25%.
While the higher price could be good news for gold investors, it means sticker shock for consumers with a month left to find a gift for Valentine's Day.
A gold necklace that sold for $80 last year now retails for $200, the Augusta, Ga., Chronicle reported. With retailers passing on the rising cost to consumers, sales are hurting.
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