LONDON: Gold hit a fresh record high on Thursday as the dollar struggled, while emerging market stocks climbed to their highest level this year.
Wall Street looked set for a buoyant start and European shares were around 1 percent higher, essentially unmoved by the Bank of England and European Central Bank both keeping interest rates unchanged.
Market sentiment was also boosted by aluminium giant Alcoa’s posting of a surprise profit on Wednesday after three consecutive quarterly losses. The company was the first major report in the US third-quarter earnings season which will go a long way to deciding the fate of a sharp equity rally dating back to March.
Spot gold topped $1,058 per ounce to mark a record high for the third session in a row, before dropping back to around $1,053.
It has primarily been driven higher by the weakening dollar, which makes the dollar-denominated metal more attractive to investors.
In some currencies — the high-flying Australian dollar, for example — gold has actually fallen in price this year.
“Investors are turning toward gold as a hedge in dollar weakness,” said Adrian Koh, an analyst at Phillip Futures in Singapore.
The dollar was down 0.6 percent against a basket of major currencies, close to its year lows.
The currency has been hit by a combination of expectations that US interest rates will stay low for some time and a belief that the global economy is on the mend, easing the motivation behind last year’s flight to dollar safety.
The euro was up 0.5 percent at $1.4752 and the dollar lost a quarter of a percent to 88.32 yen.
The Australian dollar gained 1.4 percent, still benefiting from this week’s rate hike. It has now gained nearly 28 percent against the US dollar this year.
Energy prices climbed higher on Thursday despite massive petroleum surpluses. US crude for November delivery rose $2.21 to $71.78 a barrel by 1:24 p.m. (1724 GMT). The contract closed $1.31 lower at $69.57 a barrel on Wednesday.
In London, Brent crude climbed $2.63 to $69.83.
Natural gas, gas futures and heating oil also jumped in morning trading. “It amazes me,” Phil Flynn, an analyst with PFGBest, said. “I do believe with all the supply we have, we are way overpriced.”
In other Nymex trading, heating oil rose 3.23 cents to $1.8134 a gallon. Gasoline for November delivery gained 4.07 cents to $1.761 a gallon. Natural gas for November delivery added 8.9 cents to $4.993 per 1,000 cubic feet.
The Energy Information Administration said this week that the country continues to sit on massive surpluses of petroleum. Oil and gas stockpiles are well above average, and distillate fuels have grown to their highest level since January 1983. Natural gas supplies have ballooned to their highest level on record. The EIA said Thursday that stockpiles continued to grow in underground caverns, climbing to a record 3.66 trillion cubic feet.
Traders have recently shrugged off supply data, however, and have been swayed more by uncertainty in the US dollar.
Energy commodities, which are traded in dollars, tend to rise as the dollar falls and international investors gain more buying power. They were also boosted by a government report that weekly jobless claims fell more than expected. Alcoa also reported an unexpected profit to kick off earnings season.
