Source: Marketwatch.com
San Francisco— Gold futures closed with a gain of more than $2 an ounce Wednesday, finding support from a weaker U.S. dollar as the market absorbed the latest Federal Reserve decision to raise interest rates.
"Weakness by the dollar is giving a good push above some technical levels, back above $441," said Thomas Hartmann, an analyst at Altavest Worldwide Trading. "But that's basically it."
The Japanese yen rose against the dollar Wednesday, as a few new details on China's currency policy were seen opening the door to further appreciation in the Asian currencies.
All in all "the market is pretty bearish on the dollar and just wants to drive it down for technical purposes, not by fundamentals," he said.
"Any bullish news is being discounted and ignored, but it's reasonable to expect the dollar to regain some strength at lower levels, probably in the 87-86 range" for the U.S. dollar index, he said.
Against this backdrop, December gold closed at $442 an ounce, up $2.20 on the New York Mercantile Exchange after trading as high as $442.60 earlier.
"The smart money worldwide has already been converting increasingly worthless pieces of paper currencies into 'increasingly worth-full' pieces of precious metal," said John Stafford, editor of Stafford's Investment Strategy Letter. "That process is accelerating."
"The Fed's multi-decade deliberate policy of running a 'well-managed hyperinflation' is becoming less 'well-managed'," he said. "Nothing can stop this process — except a gold-backed currency sytem again," he said, "which will not be done, sadly."
Striking up the price
Adding price support Wednesday: "the mine strike is South Africa appears to be at the bottom of everyone's concerns unless it really drags on," said Hartmann.
"It appears that the management is willing to be fairly accommodating to some of the concessions but as always, the devil is in the details," he said, adding that miners' unions, at last check, are reportedly asking for a 12% raise, and management was offering 5%.
Meanwhile, "the gold market seems to have weathered the Fed move without too much damage," said Nell Sloane, an analyst at NSFutures.com, in a note to clients.
The Federal Open Market Committee on Tuesday raised its target for short-term interest rates by a quarter percentage point to 3.5% and gave no hint that it will change its pace of incremental increases.
"The retracement in gold could be done, but it's too early to tell," said Dale Doelling, chief market technician at Trends In Commodities. "If that's the case, I expect December gold to take a run at the $451 high made in June," he said.
Elsewhere on Nymex, silver for September delivery closed at $7.078, up 4.3 cents.
September palladium closed down by 45 cents at $187.70 an ounce, and October platinum ended at $907.50 an ounce, down $1.50.
September copper closed at $1.6345 a pound, up 2.7 cents, or 1.7%, after losing 2.4% on Tuesday.
Tracking inventories, copper supplies were down 132 short tons at 9,354 short tons as of late Tuesday, according to Nymex. Silver stocks were unchanged at 111.0 million troy ounces, while gold inventories stood at 5.90 million troy ounces, also flat from the previous session.
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