Gold Prices surged 0.9% in early trade on Thursday to reach fresh 27-year highs above $748 per ounce as silver rose 1% and platinum recovered its high of Nov. 2006.
Wheat and base metal prices also rose, with aluminum adding to its third day of gains. One-month crude oil futures also rose, breaking back above $79 per barrel for both Brent traded in London and Nymex contracts in New York.
"Gold is getting closer to the pivotal point at $750 per ounce," reckons Alexander Zumpfe at Heraeus, the German refining giant.
"Gold is likely to test [that level] in the short term if the stimulating impetus from the Dollar and strong oil prices persists."
Global stock markets also raced higher, adding 1.5% in Tokyo overnight...racing 2% higher to hit new record highs in Hong Kong...and gaining 1.1% in London to take the FTSE100 within a few points of a new 6-year high.
On the currency markets, the Dollar slipped for the third session running, taking the Euro to $1.4200 by lunchtime in Frankfurt. That failed to dent Gold Priced in Euros, however, which rose to a new 17-month high above €526 per ounce.
The Pound Sterling whipped sharply around $2.0390, putting the price of gold for British investors wanting to Buy Gold Today above £367, also a new 17-month high and within site of the record top at £380 hit on 12th May 2006.
"Global gold mine production is essentially flat," said a report from Macquarie Bank in Sydney, Australia, earlier today, "as producers continue to struggle to build new projects on time and on budget."
Macquarie says its bullish view of Gold Bullion Investment is also built on lower than expected central bank sales; speculators remaining cautious of selling gold short; ongoing producer buy-backs (dehedging); and continued pressure on the US Dollar.
Looking ahead in the oil market, meantime, the International Energy Agency in Paris today said that the current high prices "reflect what's going to happen in the future.
"Stockpiles are tighter than they were. People want to know, if it is tight in the fourth quarter, are they going to be replenished in the first quarter?"
The latest US crude oil inventory data is due out at 10:30 EST. Before that, Wall Street was watching for Sept.'s import and export price inflation, plus the US trade balance – expected to show little change from Aug.'s $317 billion deficit.
US Treasury bond prices ticked lower as the "inflationary melt-up" in commodity and equity prices accelerated, pushing the 10-year bond yield up to 4.66%. Strong demand was forecast for an auction of $6 billion of inflation-linked US bonds (TIPS).
"There's no economic incentive for Treasuries to rally at the moment, and we should continue to see yields drift higher," reckons one Glasgow-based fund manager.
"The TIPS auction will go well. People are concerned about inflationary pressures."
On the other side of the trade-off between inflation and growth, however, "there's too much debt. We can't afford a recession," reckons Stephen Leeb, a money manager for high-net worth clients in the US and a famous bear on tech-stocks in 1999 – twelve months too early.
"If you asked most Americans which was the worst decade for investing, they would say the 1930s. They would be wrong. The worst decade was the 1970s, when high inflation caused negative returns on stocks, bonds, and even cash.
"In terms of purchasing power, between 1965 and 1980, a $100,000 bond investment dropped in value to $43,000."
Leeb now advocates putting as much as 10% of an investment portfolio into gold and gold mining stocks.
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