Gold Leaps 1.9% to Top $800, Its Highest in Nearly 28 Years
NEW YORK -- Gold futures set a contract high Friday, reaching levels not seen in nearly 28 years as the U.S. dollar continued to weaken and crude oil surged.</br></br>Additionally, higher-than-expected jobs data, Wednesday's Federal Reserve interest-rate cut and third-quarter gross-domestic-product data combined to ignite inflation fears.</br></br>Nearby November gold rose 1.9%, or $15, to close at $805.70 a troy ounce on the Comex division of the New York Mercantile Exchange. That is a nominal high and the loftiest the metal has been since the nearby contract high of $873 set in January 1980. Most-active December gold also rose 1.9%, or $14.80, to $808.50 an ounce after setting a contract high of $810.70, surpassing its previous contract high of $808 set in May 2006. Other precious metals such as silver, platinum and palladium also rose amid gold's strength.</br></br>"They're starting to price in some inflation," said Bart Melek, a global commodity strategist at BMO Capital Markets. Higher oil prices combined with lower interest rates "certainly harkens us back to a time when inflation is again possible," he said.</br></br>There is the potential for the housing market to keep falling, balancing out the inflation equation as other goods move higher, and that might keep the Fed comfortable in a lower interest-rate environment, Mr. Melek said.