Gold Rises as Dollar Falls, Closes Up 13% in November

Source: MarketWatch, Moming Zhou  (11/30/09)

"The gold price rally in November was driven by a perfect storm of cyclical and structural factors."


Gold futures rose Monday, marking one of the best months in 10 years, as continued weakness in the U.S. dollar boosted gold's appeal as a hedge against a weaker currency.

December gold futures rose $6.90, or 0.6%, to end at $1,181.10 an ounce on the Comex division of the New York Mercantile Exchange. It had climbed to a record high near $1,188 an ounce last week.

Gold has seen only two losing sessions in November. The metal rose 13% in November, the biggest monthly gain since November 2008. Futures soared 14% in that month, the biggest gain since 1999.

Gold futures have soared 33% this year, and have made gains in 17 out of the past 20 weeks.

Investors also beefed up their buying in gold exchange-traded funds. Holdings in SPDR Gold Trust (GLD), the biggest gold ETF, have risen 24 metric tons this month to stand at 1,127.86 metric tons as of Friday, the highest level since June.

"The gold price rally in November was driven by a perfect storm of cyclical and structural factors," said Nicholas Brooks, head of research and investment strategy at ETF Securities, which sponsors the Swiss-based gold ETFS Gold Trust (SGOL).

"The continued weakening of the U.S. dollar" and "the renewed buying of gold by central banks eager to bring down their exposure to the U.S. dollar" helped push up gold prices, he said.

Holdings in all gold ETFs—including SPDR Gold, iShares Comex Gold Trust (IAU) , and some Australian and U.K-listed ETFs—hit a fresh high of 1,766.40 metric tons Friday, said Suki Cooper, an analyst at Barclays Capital, in a note.

"Investor sentiment still remains positive towards gold," she added.