NEW YORK (TheStreet ) — Gold prices were catapulting towards $1,700 an ounce on a weaker U.S. dollar and momentum buying.
Gold for December delivery was adding $19.70 at $1,680.70 an ounce at
the Comex division of the New York Mercantile Exchange. The gold price
has traded as high as $1,693.90 and as low as $1,662 an ounce while the
spot gold price was up $19, according to Kitco’s gold index.
Silver prices were up 37 cents at $32.37 an ounce while the U.S. dollar index was losing 0.61% at $77.15.
Gold prices were rallying as a weaker U.S. dollar made the metal
cheaper to buy in other currencies and as traders jumped into the market
on a technical breakout.
“We believed a higher trading range [was] imminent after $1,675,”
says George Gero, senior vice president for RBC Capital Markets, as
“better momentum, higher volume, higher moving averages and higher open
interest came into play.”
Bob Haber, CEO of Haber Trilix, also pointed out that sentiment had
gotten very pessimistic surrounding gold after its 10% September
correction. “[We are seeing a] record change in pessimism from a few
weeks ago … creating a base here short term that will set [gold] up for a
big rally.”
Haber is long term bullish but thinks gold prices will be choppy in
the near term as they shake out that pessimism as well as the metal’s
recent positive correlation to stocks.
One belief emerging is that both stocks and gold are moving higher on
hopes that Eurozone leaders will come up with a plan to recapitalize
banks. Stocks are reacting to the possibility of decisive action from
Europe to contain its sovereign debt crisis while gold is moving higher
on the assumption that the European Central Bank will be forced to pump
more money into the system.
“We feel like we’re one announcement away from reigniting a gold
rally,” says Haber that “somehow through some kind of TARP-type thing …
[the ECB] will print money out of thin air.” If China or Brazil lowers
interest rates or if the Federal Reserve announces another stimulus,
both could serve to be a catalyst for gold prices. “That is the last
barrier for gold to come out of this holding pattern.”