Gold passes $1,400 an ounce on inflation concerns and trading momentum
NEW YORK December 28, 2010 (AP)
Gold prices surged above $1,400 an ounce Tuesday as a weaker dollar pushed investors into the safe haven of precious metals.
Gold also seems to be gaining value based on its own track record for 2010, when global economic instability made it the go-to investment for jittery traders.
"Still looking for ONE good reason for" the price increase, analyst Jon Nadler wrote in a note to clients Tuesday. "No trader can own up to one."
Nadler, a senior analyst with Kitco Metals Inc., said gold's upward momentum seems to be one of the key drivers in its continued rise, creating a kind of casino-like environment where traders snap up contracts in anticipation that others will as well.
"In so many words, it is rising because it HAS risen already. Stack the chips," Nadler wrote.
Still, there are fundamentals supporting gold's rise, said George Gero, senior vice president for RBC Wealth Management. Precious metals are a classic hedge against inflation. Traders are speculating that more central banks will take action to stimulate their economies in 2011, which could lead to inflation and make gold even more attractive than it is now.
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