RAPAPORT... Overnight gold came closest yet to $850 an ounce -- the benchmark figure for an all time record high set in January 1980.
Gold futures traded electronically as high as $848 an ounce, up $20 in 24 hours. As of 6 a.m. (New York time) gold was off the peak at $842. Spot platinum edged close to $1,490 an ounce before backing off a bit to $1,476 at 6 a.m.
The reason for gold's surge is simple: Poor economic performance from the United States. The dollar tumbled to fresh lows against the EURO, Canada's dollar, pound sterling, but held steady against the rupee.
The dollar dropped dramatically against the EURO ($1 = EUR0.6803) November 6 following China's hint of shifting more currency into EURO. One dollar buys CAD0.91, INR39.2, and GPB0.46.
HSBC analyst James Steel told clients in a memo that credit worries dominate the United States' market and enhanced risk aversion is sparking increased demand for gold, which is seen as a safe haven along with fixed income markets.
Credit market concerns and a weak dollar are two powerful engines behind gold's rally, said analyst Stephen Briggs of Societe Generale. "There is nothing on the near-term horizon to show that the winds won't continue to favor [precious metals] markets heading higher," he added.