Gold tops $1,000 per ounce, oil rises, and the U.S. dollar falls

Posted Sep 8th 2009 1:40PM by Connie Madon
Filed under: International Markets, Market Matters, Commodities, Oil, DJIA

Gold broke though the magic $1,000 per ounce Tuesday. The October gold contract rose to $1,008.30 per ounce before dropping below $1,000 again.

The U.S. dollar is sharply lower, with the September contract trading at 77.11 down 81 (the U.S. dollar is traded against a basket of currencies). As you might guess, when gold moves higher, the dollar falls. Traders dump paper dollars in favor of hard assets like gold.

The other usual suspect is oil. The October oil contract is trading at $67.54 per barrel, up $2.11. Oil usually follows gold and moves opposite the U.S. dollar because oil is denominated in U.S. dollars. Big company oil stocks followed suit, also trading higher.

The U.S. stock market is higher. The September Dow contract is trading at 9450, up 33.

U.S. bonds are flat with the December 30-year bond trading at $119.03, up only 1 tick.

We must keep an eye on the U.S. dollar. If it keeps dropping, it might create a psychological trigger signaling that U.S. debt is too high or that inflation is on the way. Either one of these scenarios is harmful to long-term growth.

Do you believe that the dollar will get weaker in the next few months?

Tags: gold, inthenews, oil, U.S. dollar