Gold Prices Rising Against Weak Dollar
April 12, 05
Closing last night on the New York market at $431 an ounce, the price of gold is rising and analysts expect the trend to continue, recommending investors to buy gold futures. With a weak dollar and rising inflation in the U.S., some are placing their bets on the metal.
|
|
From a low of $410 in early February, rising steadily to nearly $445 within a month, the price of gold is again climbing after a dipping to $424 on April 4, opening up for the third week in a row.
AngloGold Ashanti CEO Bobby Godsell expects the price to shoot up as high as $500 an ounce, the price it reached in 1987.
“High inflation is inevitable, and that will eventually benefit gold,” Stephen Leeb, president of New York-based Leeb Capital Management Inc., which oversees $110 million, including 5 percent in gold equities, told Bloomberg. As a response investors are hedging.
Gold is a popular purchase in times of inflation. In 1980, when U.S. consumer prices rose 12.5 percent, gold futures surged to $873.
U.S. consumer prices in February rose 0.4 percent, the highest in four months. Further, excluding food and energy, prices in February were 2.4 percent higher than a year earlier, the biggest increase since August 2002.
Coupled with an expectation of increased jewelry sales this year, mostly in the U.S., it’s reasonable to forecast an increase in demand for gold, as well as other precious metals such as platinum and silver.