Comment DENVER, CO - Front month Gold prices sat on top of $700 this morning for the first time in 16 months as the further decline in the U.S. dollar became more evident.
By noon October gold was trading at $706.80 an ounce after hitting a high of $710.00 earlier this morning.
The leap over $700 smiled on almost the entire mining sector. The AMEX Gold Mining Index climbed 1.6% at today's open while shares of major producers such as Barrick Gold and Newmont Mining were still climbing by lunchtime.
Gold has gained about 10% since the beginning of the year in part due to falling U.S. dollar which has lost 3.6% against the euro over the same time period. The stimulus for the next major run in gold prices is going to be the U.S. dollar. And fears over a potential rate cut had traders selling their greenbacks today. The dollar tumbled to a 15-year low this afternoon stoking fears of a recession among investors. At 12:16 pm, the U.S. dollar index sat below 80.
I expect that the U.S. dollar will continue to fall and have a significant effect on gold prices going forward for several years.
Still long gold,
Greg McCoach
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