From CNBC.com
Gold Hits New Record High as Dollar Slips
Gold rose to a record high at $1,063.60 an ounce on Tuesday as the dollar slipped against the euro, increasing the metal's appeal as an alternative asset.
Firmer oil prices and an improvement in physical demand for gold [US@GC.1 1059.9 3.2001 (+0.3%) ] after a sluggish year for jewellery buying are also lifting gold prices, analysts said.
Spot gold was bid at $1,062.70 an ounce at 0834 GMT against $1,055.25 late in New York on Monday.
Options-related activity also played a role in the euro's moves on Tuesday, with the currency's recent rebound to test September's high of $1.4842 fizzling out ahead of reported large options barriers and expiries at $1.4850.
Early trading in Europe was quiet and confined to narrow ranges, something which may change with the German ZEW investor sentiment survey at 0900 GMT and the latest batch of U.S. third quarter earnings when U.S. markets open.
"Risk perception remains an important topic in the absence of a cyclical trend out of the United States.
But I wouldn't expect any serious impact on the risk perception picture when liquidity remains very ample, so in this environment commodity currencies should continue to outperform," said Michael Klawitter, currency strategist at Commerzbank in Frankfurt.
Although U.S. central bank officials continue to warn of eventual policy tightening, this was only to put a lid on inflation expectations.
"They have to express a certain degree of hawkishness. But between that and actual action, there is a fairly large gap. Consequently, the dollar isn't getting any real meaningful support," Klawitter said.At 0750 GMT the dollar index, a measure of the greenback's value against six currencies, was up 0.15 percent on the day at 76.25, still within sight of its 14-month low of 75.767 struck last week.
Fed Speakers
The dollar was up a quarter of a percent against the yen [$$USDJPY 89.69 -0.10 (-0.11%) ]and was flat against the euro at $1.4765 per euro [EUR= 1.4836 0.0058 (+0.39%) ].
The Dollar Meeting Nobody Talks About
"We remain bullish on the yen crosses as we expect bond markets to remain under near-term selling pressure as equity markets move sharply higher," BNP Paribas said on Tuesday.
"Oil price and other commodity prices are rising as investors line up for everything which looks like an asset."
The New Zealand dollar [NZD= 0.7351 -0.0007 (-0.1%) ] was up almost half a percent while the Australian dollar, which earlier hit a 14-month high of $0.9094 [AUD= 0.9071 -0.0001 (-0.01%) ] eased back as dealers booked profits from the recent rise.
Sterling remained under selling pressure, with the euro hitting a fresh 6-month high of 93.89 pence as concerns about Britain's weak fiscal position outweighed positive data.
Although overall market activity was subdued, growth-linked and higher-yielding currencies such as the Aussie and the kiwi were supported ahead of more U.S. earnings this week.
The full court press is now going on. The little people know they should own Gold. I am hearing that the guy on the street is asking how he can buy Gold bars. It is like oil going to 200 when it was above 100. No way was oil going to go down. It did go to 148 but it went to 30 and is now 74. I still say when this is over Gold is going to 400 and when it does no one will believe it.
The most recent hype began on Sept 3 with all the experts recommending Gold. I blogged about this on that date. The public was exposed to the idea of buying Gold on that Day and Gold was 992 at that time. We are now 5 weeks past that time and the prices have validated that idea to the extent that the public wants to buy it. First the idea then the price confirmation. The deed is done. Price weakness from this level will not be believed and the boys can move it lower.
I bought the GLL (double Gold short) on 9/24 @ 12.79 it is now 11.31. I shorted the GDX (Gold Miners index) on 9/4 @ 45.04 it is now 49.50. My next short will come on price weakness when gold crosses below 980. I am obviously on the wrong side of this trade now as the trend is up strongly and Gold is breaking out. Don't try this at home.
The job of the Fed is to get the markets set up so they can do their thing. Right now the dollar is set up for a big move up. The extent of the move depends on the magnitude of the set up. How far they go determines the magnitude of the move they want. What I don't know is how big a move they want. The longer they set it up the bigger the move. Therefore, at some point I say wow I didn't think they would go that far and start taking a position because I know that the move is going to be a big one based on what I am hearing and seeing the public doing.
Why do this? Because I have been through this many times and I am confident of the outcome. I am also confident that I will probably get my butt kicked in the short run. That is the price of admission. I would say most people would not do what I do because there is pain involved. I have learned the more pain the more gain.
The beat goes on ...Mikey
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