Nicholas M Ong

The past weekend once again demonstrated the volatility of stocks and blue chips trading. Though the dollar did strengthen pushing all the major indices upwards for 2 days at least, the steam isn’t keeping up with the record rise in hedging on commodities. It was only last weekend that the precious yellow metal lost $25 (2%) in loses. It was on $912 per ounce.

It was only late last week Wall Street reported a ‘Good Day’ and oil prices dove. Crude oil is once again flirting with the $120 mark. I have taken to jumping in on the boat and made my switch in my funds to commodities.

Well, if you aren’t so keen to jump in on the commodities market at the moment, you might want to consider something on a smaller scale. Check out my previous post on ‘Profiting from the gold rush‘. You will need either one of these (both free) to get started. I recommend the latter since we are focusing on gold prices.

• AlertPay
• Egold

Gold rises as record crude raises inflation concerns

By Moming Zhou, MarketWatch

Last update: 2:05 p.m. EDT April 28, 2008

SAN FRANCISCO (MarketWatch) — Gold futures rose on Monday after the crude-oil contract neared $120 a barrel, raising the metal’s appeal as a hedge against inflation.

Gold for June delivery gained $5.80, or 0.7%, to end at $895.50 an ounce on the New York Mercantile Exchange. Crude futures rose overnight to a new record high of $119.93 a barrel in electronic trading.

“Metals could not help but notice the explosive move in crude,” said Edward Meir, an analyst at MF Global, in a research note. “We expect commodities in general to remain firm at least through to midweek, as the strong energy complex sets the tone, while the weakness in the dollar should also help.”

The dollar rose fell slightly on Monday, supporting gold’s gains, as traders weighed the odds of the Federal Reserve further reducing benchmark U.S. interest rates. Dollar-denominated commodity prices tend to rise when the currency loses ground.

The dollar index, which tracks the value of the greenback against a basket of other currencies, fell 0.1% to 72.61. See Currencies.

On the energy markets, the move higher in crude-oil futures stemmed from a strike called at a refinery in Scotland, forcing a key pipeline to be closed, while rebel attacks in Nigeria and tensions in Persian Gulf also fanned concerns about supply disruptions. See Futures Movers.

Commodity traders are awaiting Wednesday’s Fed meeting. Futures markets generally expect U.S. policymakers to lower interest rates by a quarter of percentage point, but there’s been a school of thought that the Fed may opt to hold the line on rates in light of inflation jitters and the weakness in the dollar.

“Gold will trade cautiously in the next couple of sessions,” with the Fed meeting coming, said analysts at Action Economics.

“We expect the dollar’s rally to pick up steam if the Federal Reserve decides to stand pat on interest rates,” said Meir. “This could set off another potentially heavy round of profit-taking in commodities.”

Also in Nymex metals action, May silver gained rose 16.3 cents to $17.013 an ounce and May copper gained 2 cents to $3.9355 a pound, while July platinum edged up $10.60 to $1,978.60 an ounce and June palladium fell $8.15 to $440.80 an ounce. .

Moming Zhou is a MarketWatch reporter, based in San Francisco.

Gold on the rise as record crude fuels inflation concerns - MarketWatch