Gold price climbs $55 since September low, easily surpasses $400

Surprising more than a few analysts, the gold price has staged a recovery and surged past $400(US) per oz.

The precious metal, in a price slump the past few months, has not reached such lofty heights since January, having entered 1989 just above $400. (Gold edged over $500 briefly in December, 1987, its peak in recent years.)

Low price for this year occurred in September, when gold hit $355.75 in London. Similar prices for the metal had not been seen since 1986.

In London, the price seemed to hesitate Nov 21 before finally making up its mind. The morning fix that day reached $400.30, then slipped back to $399 for the afternoon fix. (In New York on Nov 21, gold closed at $403.70.) The Nov 22 morning fix in London brought a definite response of $406.60, and the afternoon fix an even stronger $409.90.

Reasons for gold’s rise in popularity are not easy to define. “Speculative buying,” said one trader. “It’s all emotionally fed.” Buyers from the Far East and Mid-East gave the gold market some impetus a few weeks ago and now the Europeans appear to have become active players again.

Other precious metals also moved higher. Platinum, trading at well over $500(US) per oz again, would appear to be moving in tandem with gold. Silver, on the other hand, in a deep slump, rallied suddenly and is now trading near $6(US) per oz.

Securities dealer Vay Jonynas of Moss Lawson, who has been bearish on gold and wasn’t expecting a major price move upward for the next year or so, offered two main reasons for the surge.

In the U.S., he said, where the dollar this year has been enjoying considerable strength, the federal government has been easing up on the money supply, causing worries of impending higher inflation. And, with the recent political events in Eastern Europe, he suggested investors may be getting nervous as the situation in the various East Bloc countries could spin out of control.

The same week the gold price topped $400, the U.S. government reported a 0.5 % rise in that country’s consumer price index for October. That inflation jump followed four months of relatively small increases in the index.