This morning, gold was on a spike. The price of gold was on its way to a three-month high and headed for its biggest one-week rally in over a month. It seems Europe’s bailout deal with Greece has lifted the euro, while platinum hit a five-month peak as a damaging strike in major producer South Africa ground on.
A stronger euro, coupled with growing concern over the impact on inflation from oil trading above $120 a barrel helped spur a bid for gold ahead of an options expiry later in the day.
Spot gold was at $1,781 an ounce. It earlier rallied to a high of $1,784.46 an ounce, its strongest since November 15.
The euro rose to a 10-week high against the dollar, also its strongest level since November versus the yen on Thursday after better-than-expected German data eased concerns about the euro zone’s economic outlook.
German business sentiment rose for a fourth month running in February, raising hopes that Europe’s largest economy is improving and will avoid recession despite the problems facing indebted euro zone countries.
Gains in crude oil prices also helped gold. Brent oil powered to a nine-month high above $124 per barrel on Thursday due to heightened tension between Iran and the West.
A report showing existing home sales in the U.S. rose less than expected in January also weighed on sentiment, particularly in the U.S., where the Dow Jones industrial average fell 27.02 points, or 0.21%, to 12,938.67, and the Nasdaq composite slipped 15.40 points, or 0.52%, to 2,933.17.
Commodity prices erased earlier losses to post positive results for the day, even though the gain for oil was slight – just US3¢, to US$106.28 a barrel in the April contract. Gold producers benefited from the rise in the price of the precious metal, including Barrick Gold, which saw its share price rise 2.55%, to $49.48. Goldcorp shares rose 2.28% to $49.26, and Eldorado Gold went up 3.21% to $14.80.
The Canadian dollar had its first belowpar close since the first of the month, falling 38 basis points to US99.96¢.