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Gold shines on dollar ills
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September 4, 1998: 4:35 p.m. ET
Yen, mark gains lift precious metals despite Luxembourg sales
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NEW YORK (CNNfn) - Gold prices climbed higher Friday as the dollar weakened further against the Japanese yen, analysts said.
The Comex gold futures contract for delivery in December settled at $288.90 an ounce, up $1.80. That follows a 1.7 percent rise in gold prices on Thursday.
A sudden outbreak of stock jitters on Wall Street have eroded the notion that the U.S. economy might be immune from the effect of reeling stock markets worldwide.
In the past week, the U.S. dollar has slid against the Japanese yen partly due to Wall Street's seeming fallibility. And on Thursday, the dollar hit new 10-month lows against the German mark.
A stronger yen or mark means Japanese or German investors can get more gold for their money.
Gold is seen as an alternative to dollars in times of inflation. But with the world's stock markets getting pounded of late, some market watchers say deflation is more of a risk, and bonds have become the hedge of choice.
The precious metal has been melting under heat of greater supplies, sparked by a plan by European Union nations to trim their holdings of gold by selling on the open market.
The central bank in Luxembourg was reportedly the latest to pare back its holdings of gold, selling the bulk of its reserves to make way for the coming "euro" currency in Europe next year.
One analyst said that won't add much supply to the market. "Luxembourg doesn't hold that much," said Ted Kempf, a metals analyst with CPM Group.
"They would be picking a pretty rotten time to sell anyway," he added. Gold prices hit a 19-year low last week.
Kempf also said there has been some fresh long-buying in the market since gold hit those lows last week.
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