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Gold hits new record { January 2008 } Original Source Link: (May no longer be active)
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Gold Hits Record on Oil Rally
Wednesday February 20, 5:21 PM EST
NEW YORK (AP) — Gold surged to a record in aftermarket trading Wednesday after oil rallied above $100 a barrel and investors bet the Federal Reserve will again slash interest rates — boosting the metal's appeal as a hedge against inflation.
Other precious metals traded mixed, with silver also touching a record-high and platinum retreating from historic levels.
Gold has risen more than 12 percent this year, driven mainly by oil's ascent to $100 and steep declines in the U.S. dollar. Gold for April delivery jumped as high as $949.20 an ounce in electronic trading on the New York Mercantile Exchange — the highest ever and within striking distance of the psychologically important $1,000 barrier. Earlier Wednesday, gold settled $8 higher at $937.80.
"I would point to oil as the primary driver. Oil and gold seem to be in lockstep right now," said Jon Nadler, senior analyst of Kitco Bullion Dealers Montreal.
Silver joined gold's rally, shooting 33.2 cents higher late Wednesday to reach $17.84 an ounce for March delivery on the Nymex, after earlier touching a record $17.87. Silver ended the day 25.20 cents higher to settle at $17.760.
Platinum for April delivery retreated from record territory on profit-taking, losing $14.30 to settle at $2,138.80 an ounce on the Nymex, after earlier falling as low as $2,062 an ounce. March copper fell 1.50 cents to $3.7085 a pound.
Gold's rise also comes as market expectations for further interest rate cuts have solidified. Fallout from the housing slump and credit crunch prompted the Federal Reserve on Wednesday to lower its projection for economic growth this year — raising expectations that the central bank will further decrease its benchmark rate to jolt the economy.
Lower interest rates can help the economy but tend to depress the dollar, encouraging investors to shift funds into hard assets like gold or oil as a safeguard against inflation.
The contract for March delivery of light sweet crude, which was expiring later Wednesday, rose 73 cents to settle at a record $100.74 on the New York Mercantile Exchange after earlier rising as high as $101.32, a new trading record.
Other energy futures fell. March gasoline slipped 1.79 cents to settle at $2.5852 a gallon on the Nymex, while March heating oil fell 0.68 cent to settle at $2.7546 a gallon.
In agriculture markets, wheat prices plummeted Wednesday as traders cashed in profits following three days of gains.
Wheat's decline came amid speculation that several developing countries, seizing on the grain's record-setting rally in recent days, have begun selling previously purchased wheat back to the U.S. in a bid to lock in gains, analysts said.
"The profit-taking is coming in from the spec community based on that rumor," said Jason Ward, grains analyst with Northstar Commodity in Minneapolis. "You could see the market fall back some more, but unless you get a new crop to come in and meet demand, the prices are going to go back up."
Wheat for May delivery shed 14 cents to settle at $10.325 a bushel on the Chicago Board of Trade, after earlier falling as low as $10.22 a bushel. Wheat hit an all-time high of $11.6975 a bushel earlier this month.
Other agriculture futures traded mixed. Soybeans for March delivery fell 0.75 cent to settle at $14.17 a bushel on the CBOT, while March corn gained 3.5 cents to settle at $5.235 a bushel.
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