Gold prices dip, other commodities rise By SARA LEPRO – 4 hours ago http://www.google.com/hostednews/ap/article/ALeqM5jND4r3B-VBZu2Ogg2_yzjYnPIP8gD95RQIAG0
NEW YORK (AP) — A wavering dollar sent gold prices falling slightly Wednesday even though a pair of analysts raised their forecasts for the metal. Energy and agriculture futures were buoyed by gains on Wall Street.
Analysts at Morgan Stanley and UBS said Wednesday they expect gold prices to trade higher in 2009, benefiting from some safe-haven buying as well as long-term concerns about inflation.
Gold, which is often used as a hedge against a weak greenback, has traded within a fairly tight range of between $800 and $890 since the start of this year as investors wrestle with the short-term versus long-term prospects for the metal.
While investors are fearful that a prolonged recession will curb demand and weigh on commodities prices in the near future, there is also some concern that the government's recent efforts to prop up banks and pump money into the system will weaken the dollar over time, potentially sparking inflation.
"Near-term, a stronger U.S. dollar, weaker economic growth and deflation fears could contain the gold story," wrote Morgan Stanley analyst Mark Liinamaa in a research note. "However, we believe longer-term concerns of devalued currencies and inflation risks will prove investable themes favoring gold."
Liinamaa said he expects gold to hit $900 an ounce this year, and $1,000 in 2010.
Likewise, UBS analyst John Reade raised his short-term forecast for gold to $900 an ounce from $800 an ounce.
"For the moment, there is this continuing tug of war of, 'Will inflation take hold?'" said Jon Nadler, senior analyst with Kitco Bullion Dealers Montreal.
But for the time being, the dollar is likely to remain somewhat stable as currencies overseas weaken, he said.
"The pound looks really sick," Nadler said. "(Europe is) just now experiencing sort of what we went through a year ago in the States. ... We've got a dollar that is looking pretty resilient all in all."
On Wednesday, the British pound fell to a nearly 25-year low against the dollar amid mounting fears about the British banking sector and expectations the Bank of England will start pumping money into the economy within weeks. The Royal Bank of Scotland, a large U.K. bank, alarmed investors around the world this week by warning its 2008 loss might top $41 billion. That prompted the British government to announce a fresh round of bailouts for the banking industry. The dollar later lost some ground against the pound and the euro.
After fluctuating throughout most of the session, gold for February delivery finished down $5.10 to settle at $850.10 an ounce on the New York Mercantile Exchange.
Other precious metals prices were mixed. March silver gained 15 cents to $11.3250 an ounce, while March copper futures fell 7.1 cents to $1.4335 a pound.
On Wall Street, stocks rebounded from the previous day's sharp plunge, led by gains in the technology sector after a better-than-expected 2009 forecast from IBM Corp. Financial stocks, which have been battered in recent days on concerns that the government will be forced to provide additional aid as losses mount, also pared some of their losses.
The Dow Jones industrials rose 279 points to finish at 8,228. Broader indexes gained more than 4 percent.
Bond prices fell as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.53 percent from 2.37 percent late Tuesday.
Oil prices jumped more than 6 percent, boosted by the rebound on Wall Street.
Light, sweet crude for March delivery rose $2.71 to settle at $43.55 a barrel on the New York Stock Exchange.
In other Nymex trading, gasoline futures rose 3 cents to settle at $1.1738 a gallon, and heating oil rose a penny to settle at $1.386 a gallon.
Grain prices also advanced. March wheat futures rose 21.75 cents to $5.7175 a bushel on the Chicago Board of Trade, while corn for March delivery rose 6.75 cents to $3.9025 a bushel.
March soybeans gained 28.5 cents to $10.2050 a bushel.
NCM Price at posting:
$31.85 Sentiment: Hold Disclosure: Held
