Gold prices reach new high as dollar weakens
Gold prices continue to move to new all time highs with a lower dollar this week. One ounce of gold approached $1,431 in early New York NYMEX trade Tuesday (December 7) morning and currently nets $1,429.40.
With a stronger dollar in recent weeks and renewed hope for the US economy, gold fell strongly from its November high of $1,421. The 30-day low on November 17th was $1,335.80.
The dollar was in strong form recently against major European currencies long the euro and pound. A firm greenback is normally an indication of lower gold prices. However, analysts agreed the dollarâ€™s strength was more a sign of relative weakness in Europe.
Irelandâ€™s growing debt problem combined with credit issues in other major European economies has been a soar spot again for the euro. Renewed commitment of support by Germany and other European Union members has slowed downward movement in the euro of late.
Even as US equities appear ready for a strong move up again in early Tuesday trade, speculators still feel comfortable in the safe money investment of gold. Gold has been on a 1-year run that has produced nearly $1,200 in gains for long-term investors that bought in around 2000.
During its run, gold has produced a nearly 17 percent annualized return. This is comparable to what the stock market has generated for long-term investors during the 20th and early 21st century.
The euro and pound have also moved higher against the dollar to start the week. The euro is worth $1.3390 after falling below $1.30 early last week. A British pound nets $1.5802 after a dip below $1.55 last week.
The yen has restricted higher movement of the dollar as it tried to safely prevent a fall below the 80 yen mark in recent weeks. One dollar has a current value of 82.69 yen and appears fragile in an effort to hold 80 in coming weeks.
Stock investors appear delighted with news that President Obama has agreed to extend tax cuts established under President Bush, not just for the middle class, but for the wealthy as well. This has recently been a point of contention among partisan politicians.
Lower taxes may boost consumer confidence and inspire higher risk investing.
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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