Investors send gold soaring

The price of gold was on a tear upwards and the stock markets in retreat today, Jan. 24.

Gold, which spent more than a few months last year below US$400, rallied today in London, where the afternoon fix was recorded at US$420.75 per oz., up US$12.50 from the preceding day. Previous high for the year was US$415.60 on Jan. 15.

The price of gold has generally been trending lower since late 1987, when the precious metal briefly topped US$500. For that year, gold averaged US$446. Two years ago the metal averaged US$437, while in 1989 it averaged US$382.

Both the Toronto and New York Stock exchanges were off today in early trading, with the TSE 300 index down 65 points and the Dow Jones average down 50 points by midday. The two exchanges seemed to take their cue from the Tokyo market, where the Nikkei average had dropped 600 points (1.2%) overnight.

The Tokyo market had previously posted three straight gains. The Toronto and New York markets were both coming off small gains after experiencing large sell-offs at the beginning of the week. While gold is soaring, nickel prices having been heading in the opposite direction, falling below US$ 3 per lb. Last year, nickel averaged US$6.05 on the LME.

The Canadian dollar has also been losing ground of late, the Bank of Canada having eased its monetary policy slightly. By early afternoon, the Canadian dollar was in the US84.4 cents range. A lower dollar value is positive news for commodity producers such as the nickel companies which sell large portions of their output abroad.