Low Interest Rate Helps Gold Continue Record Run

As the US dollar index continues to fall, gold prices are rising once again. With the Federal Reserve’s key interest rates at exceptionally low levels — and expected …

As the US dollar index continues to fall, gold prices are rising once again. With the Federal Reserve’s key interest rates at exceptionally low levels — and expected to remain so for awhile — gold’s appeal as an alternative asset continues to increase. See the following article from The Street for more on this.

Gold prices are rising again after easing back from a record high of $1,098.

Gold delivery for December added $1.90 to $1,089.20 an ounce in recent trading at the Comex division of the New York Mercantile Exchange. The contract has traded as low as $1,084.30 and as high as $1,095.20.

Silver gained 3 cents to $17.44 and copper slipped 2 cents to $2.96.

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Gold is resuming a bullish move to $1,100 after the Federal Reserve kept key interest-rates at a level of zero to 0.25%. The central bank pledged to keep rates “exceptionally low” for an “extended period” of time. With cheap money flowing and no end in sight, the U.S. dollar index fell to $75.63 increasing gold’s appeal as an alternative asset.

“It’s apparent the Fed really can’t afford to raise interest rates, which would be dollar supportive, given the fact that the economy is still in a fairly tenuous state,” says Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund. “The fed still needs to be accommodating to keep the recovering going. It’s obviously dollar bearish and really bullish for gold.” Gold prices will most likely see some light profit taking and will look to Friday’s U.S. nonfarm payroll report for direction.

In mining stocks, Royal Gold(RGLD Quote) fell 1.17% to $47.73 after the company beat first quarter earnings by a penny on revenues of $26.1 million. Eldorado Gold(EGO Quote) received an upgrade from RBC Capital to outperform from sector perform. Shares rose 2.22% to $12.24.

Goldcorp(GG Quote) reported third quarter earnings of 19 cents a share even though its net profit sank 62%. The company raised its 2009 production forecast to 2.4 million ounces. Shares got a slight lift to $40.15.

Heavily traded big-cap miners, Barrick Gold(ABX Quote) and Newmont Mining(NEM Quote), were relatively unchanged at $39.91 and $46.86 respectively.

Shares of the popular SPDR Gold Shares(GLD Quote) were trading at $106.75.

This article has been republished from The Street. You can also view this article
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