‘Feeding frenzy’ sends precious metals surging

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Gold and other precious metals soared again today amid a buying stampede.

Near-term gold futures in New York jumped $13.90, or 1.4%, to finish the session at $1,018.90 an ounce, a record closing high.

Silver rocketed 43 cents, or 2.5%, to $17.41 an ounce; platinum gained $29.80, or 2.3%, to $1,350.

‘It’s really a feeding frenzy,’ said Larry Young, senior trader at Infinity Futures in Chicago.

Gold is up 7.1% so far this month, beating the 4.7% advance in the Standard & Poor’s 500 stock index.

Traders said today’s rally was stoked in part by another drop in the dollar’s value, which gives investors one of the best excuses for turning to metals as a way to protect their money’s purchasing power.

The DXY index, which tracks the dollar against six other major currencies, is at 76.18 today, down 0.5% from Tuesday and the lowest level in nearly a year. It’s down 2.5% just this month.

The greenback has been skidding in large part because investors are more confident about a global economic rebound. That is luring money into riskier assets, including many emerging markets. Brazil’s main stock index is up 6.9% this month, for example. The South Korean market is up 5.8%.

But there also is an undercurrent of fear about the dollar’s long-term outlook, given the potentially debilitating effects on the currency from the massive U.S. budget deficit. One way to lessen that debt load would be to allow inflation to rise, of course -- which would bolster the case for classic inflation hedges like gold.

For the moment, though, the precious-metals rally is mostly about momentum, many traders concede. ‘People who’ve been on the sidelines are going to jump in now,’ Young said.

Frank Lesh, a futures analyst and trader at FuturePath Trading in Chicago, said the metals also are benefiting as some traders turn away from oil futures, fearing that the Obama administration is intent on curbing speculation in that market.

‘I think some of that speculative money in the energy markets is moving into gold now,’ Lesh said.

-- Tom Petruno