Gold Jumps on Renewed Inflation Concerns

US stocks reversed course Wednesday, making a 240+ points swing from down 154 points to close the session up 90 points.

As stocks turned around, gold also got a boost to reach a new record of $945.80 an ounce. The precious metal rallied after a government report showed that inflation picked up steam in January with CPI rising 0.40% and core CPI 0.30% - both exceeding expectations.

Year-to-date, bullion has gained more than $100. Gold based exchange-traded funds (ETFs) are the bright spots in a disappointing market so far. Among gold ETFs, streetTRACKS Gold Shares (GLD) has returned 13.07% in 2008 and iShares COMEX Gold Trust (IAU) gained 11.16%.

It’s obvious that gold is quite hot these days. However, if you look at platinum, you will know what’s hotter. Platinum price has risen $532 an ounce since the beginning of 2008, that’s equivalent to a gain of nearly 35%.

By the way, crude oil also made a run to close above $100 a barrel for second day in a row. Pretty soon, we are going to feel the pain at the pump.

Comments

[EE:]

Have you noticed the gold/silver ratio shrinking yet? Silver, much rarer than gold, will grossly out perform.

2008 Feb 21 08:20 AM

[Mr. G:]

While all analysts have attempted to link gold prices to oil or the devaluing dollar, I think gold is finally showing the driving force being global inflation and recession tendancies in the U.S. The CPI report yesterday clearly was the driving force.

2008 Feb 21 08:30 AM

[Don V.:]

these oil prices will never see a long term downtrend again. getting harder and harder to fill up these days. I will hate to see 5 years from now what it will be like.

2008 Feb 23 11:23 PM