It's Monday morning and it's the same old, same old: gold surges to a new high; commodities rally; stocks rally; and the dollar is weaker. Traders see this as a no brainer.
Spot gold is strong today, reaching a new high of $1165.45 per ounce, up from Friday's close of $1148.20. On the COMEX, gold traded at $1,165.90, up $19.10 per ounce (each $1.00 equals $100.00). Gold has been spurred higher by central bank and fund buying.
Options traders are betting on gold rising to $1,200 per ounce. That's only $35 away. We could see that in another day of two if current trend continues.
The dollar extended its losses, hitting a six week low versus the yen, after comments from the Federal Reserve that interest rates would remain low. The dollar is being used in the "carry trade" where traders sell dollars to buy stocks and commodities.
Oil prices rallied 1% to $78.00 per barrel. Strong oil prices help to bolster metals prices.
Other precious metals also rose. Spot platinum was at $1,470 per ounce. Palladium was at $369 per ounce, up $8. Spot silver peaked at $18.88 per ounce, its strongest since July 2008.
Just a bit of caution. Remember that markets are psychological. If traders sniff the winds of inflation, all bets are off as far as equities and risk investments rising skyward are concerned. For now, remember: "the trend is your friend."
Do you believe that this rally will continue?
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