A late-day rally boosted precious metals, putting them back gold and silver back into positive territory after a slow day. The gains came mostly from currency and inflation concerns – the vehement rhetoric at the Group of 20 meeting in Seoul has some observers wondering how bad the global currency war, as Brazilian finance minister Guido Mantega called it, will get.
There's some speculation, however far-fetched, that the dollar could actually be replaced by some other currency or basket of currencies. The recent quantitative easing action begun by the Federal Reserve is pumping money into economies like China and Brazil – and those countries are feeling the potentially destabilizing effects, which include currency appreciation, inflation and possible asset bubbles.
"To the extent the US wants to reduce its balance of payments deficits, it will be like reducing everybody else's capacity to accumulate reserves," Brazilian economist Gustavo Franco told the al-Jazeera news service. "And Brazil and all the other members of the G20 – the periphery countries – liked the accumulation of reserves."
With the dollar appearing weak, hard assets like gold and silver look like attractive hedges against inflation.
Comex gold futures for December delivery rose $9.30 to $1,408.60 per troy ounce, while silver rallied 82 cents to $27.685 per troy ounce.
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