Daily Gold Update

Source: MarketWatch

New York— Gold futures surged nearly 4% Thursday as weakness in the U.S. dollar buoyed investment demand for the metal, lifting prices to their highest level in a month. Silver futures also rallied, up more than 4% to a nearly one-week high. Gold for August delivery rose to an intraday high of $916.50 an ounce on the New York Mercantile Exchange. That's the contract's highest intraday level since May 27. Gold was last up $31 to $913.30 an ounce on Nymex.

The U.S. dollar extended its post-Fed losses on Thursday. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, was at 72.60, compared with 72.90 in late North American trading Wednesday, following the Fed's announcement. "There is the risk that, while the Federal Reserve has to an extent 'talked the talk' regarding inflation, it is failing to 'walk the walk' by raising interest rates in order to combat the real threat posed by surging inflation," said Mark O'Byrne, executive director of Gold and Silver Investments Ltd., in a research note. Inflation in the U.S. remains higher than interest rates, and continuing negative real interest rates could lead to an "inflationary spiral," O'Byrne said. That "will likely lead to sharply increased investment demand for gold to hedge against burgeoning stagflation." See full story.