St. LOUIS (ResourceInvestor.com) -- Precious metals surged today in light of a currency revaluation in China and explosions in London, boosting gold to its highest closing level since July 12.
"Gold is not normally a 'feel good' purchase. One wants to own it not because 'all is well,'" said Peter Grandich, editor of the Grandich Letter, in recent a Resource Investor article.
"Gold buyers have not considered the terrorism factor for quite a while but now can't ignore it for the foreseeable future," he added.
London Bombings
The attacks today paralleled the July 7 blasts, which involved explosions at three Underground stations and a bus, but were more spread out and occurred during the lunch hour - beginning at about 12:38 p.m.
These bombs targeted trains near the Warren Street, Oval and Shepherd's Bush stations. The bus was hit while on Hackney Road in east London.
Fortunately, the explosive devices were either faulty or too small to cause bloodshed, and the only reported injury turned out to be an asthma attack. The subway system was not shut down.
Police in London have already arrested two men in connection with the attacks. The men are currently being questioned.
Authorities said it was too early to determine whether the attacks were carried out by the same organization as the July 7 blasts, or whether they were linked to al-Qaida.
China's Currency Revaluation
China cut its currency's link to the US dollar and raised its value by about 2%, forcing a broad retreat in the dollar.
In a surprise announcement on state television's evening news, the government announced the change to an exchange rate of 8.11 yuan to the dollar, which raised the value of one yuan by about one-quarter of one US cent to 12.33 cents.
The effect on US financial markets was immediate - the dollar fell against other major currencies and yields on US Treasury securities rose. Investors then turned to gold as a dollar alternative.
The Result
Gold for August delivery rose $3.60 to close at $425.70 an ounce on the New York Mercantile Exchange was all was said and done.
September silver rallying to a close at a three-week high of $7.135 an ounce, up 6.7 cents.
October platinum closed at $886 an ounce, up $11 - its highest close since mid-June.
September palladium added $4.55 to close at $197.30 an ounce, its highest since mid-May.
Although September copper fell 2.15 cents to end at $1.57 a pound, it traded at a contract high of $1.606.
