Gold roars to record high
Gold roars to record high
ATUL PRAKASH
Thursday, March 06, 2008
LONDON — Gold roared to a record high on Thursday and held within sight of $1,000 (U.S.) an ounce, as the dollar struck an all-time low and oil stood around $105 a barrel.
Silver struck a 27-year high above $21 on strong speculative buying, platinum traded below an historical peak and U.S. gold futures held just near record highs around $995 an ounce.
Spot gold jumped as high as $991.90 an ounce and was quoted at $987.60/988.40 at 1123 GMT, against $985.70/986.50 in New York late on Wednesday.
“It's an investor-driven story, with the investor demand coming from U.S. dollar weakness. I can't see the trend abating any time soon, with all the drivers of gold remaining in place,” said Daniel Hynes, metals strategist at Merrill Lynch.
“Also inflation concerns seem to be rising on a daily basis and that certainly bodes well for gold, which in the past has been a hedge against such concerns.
“$1,000 is a foregone conclusion now.”
Gold has gained nearly 20 per cent in 2008 as funds, speculators and investors pour money into precious metals on expectation of further interest rate cuts in the United States and record-high oil, which lift its safe-haven appeal.
The dollar hit lifetime lows versus the euro, with investors looking to the European Central Bank's interest rate decision and news conference later for fresh signals on monetary policy.
While the ECB is seen holding interest rates steady at 4 per cent, all eyes are on the bank's president, Jean-Claude Trichet, for hints of a shift in policy that might provide respite for the greenback's broad fall.
“The ongoing weakness in the dollar and fresh highs for oil look set to entice further anti-recessionary/inflationary hedging towards gold and will ultimately push the metals higher,” TheBullionDesk.com said in a note.
“The big question now is how much resistance lies ahead of $1,000,” it added.
The dollar's decline has been exacerbated by weak U.S. economic data and worries about a recession, which has galvanized the U.S. Federal Reserve to cut borrowing costs sharply to 3 per cent, with further easing expected to come.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil held around $105 a barrel, retaining most of the previous day's gains to record highs due a drop in U.S. oil inventories and OPEC's decision to leave output unchanged.
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $1.3 to $989.70 an ounce, near its record high of $995.20 hit on Wednesday.
Gold has also jumped in other currencies, which is often seen as a bullish sign. The metal quoted in euros was at 644 euros an ounce, just below this week's record high of 649.85 euros. It was last at 497.32 sterling, versus Monday's record of 497.55 sterling.
Platinum fell to $2,225/2,235 an ounce after rising to $2,272, against $2,240/2,247 in New York on Wednesday. It hit a record high of $2,290 this week on supply concerns following power problems in South Africa, the world's top producer.
South Africa will allow mines to increase power consumption from 90 to 95 per cent of normal usage as the country's power crisis has stabilized, Bloomberg News reported on Thursday, citing the energy minister.
Mines in South Africa, the world's biggest producer of platinum, have been operating at 90 per cent of their usual power since late January after electricity shortages forced the mining sector to shut down for five days.
Silver hit an intraday high of $21.20 an ounce, up from $20.61/20.66 late in New York. Spot palladium fell to $546/555 an ounce from $552/556 .
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