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Cash gold nears $1,000 level hit by US futures

Cash gold nears $1,000 level hit by US futures
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First Published: Fri, Mar 14 2008. 09 57 AM IST
Updated: Fri, Mar 14 2008. 09 57 AM IST
Singapore: Spot gold steadied on Friday and held within sight of the $1,000-an-ounce barrier broken on the futures market after the dollar hit a record low against the euro, boosting the metal’s appeal as an alternative investment.
Gold has gained nearly 20% in 2008, driven by buying from investors and speculators on expectations of further interest rate cuts in the United States and record high oil prices, which raised its appeal as an alternative investment.
Spot gold rose to $993.80/994.60 an ounce from $991.00/991.80 late in New York. It had powered to another record high of $999.90 an ounce on Thursday.
Platinum and palladium held below their recent highs, while silver tracked firm bullion.
“Providing oil prices maintain a dizzy height and the US continues to suffer, it looks extremely likely that gold will test the $1,000 level and likely break through it,” said Darren Heathcote of Investec Australia in Sydney.
“But it may see some profit-taking as we get there, which may hold its rise initially before possibly progressing on to $1,004 to $1,005 an ounce,” said Heathcote, who expected gold to hit $1,000 later on Friday.
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange added $1.7 an ounce to $995.5 an ounce, having struck a record $1,001.50 on Thursday.
Gold hit $850 an ounce in January 1980 as high inflation linked to strong oil prices, plus the Soviet intervention in Afghanistan and the impact of the Iranian revolution, prompted investors to buy the metal.
After adjusting for inflation, the 1980 high is equivalent to $2,119.30 an ounce at 2007 prices, according to precious metals consultancy GFMS Ltd.
In the physical sector, dealers saw sales of scrap as jewellers and investors cashed in on gold’s rise.
“There’s of course some profit-taking but I guess people are also cautious about what’s going to happen after the price hits $1,000. Some people are talking about gold hitting $1,100 and $1,200 in the middle of this year,” said a dealer in Hong Kong.
The dollar steadied around $1.5615 against the euro after tumbling to an all-time low of $1.5646 in late New York. Oil dropped on profit-taking after hitting a record $111 a barrel on Thursday.
“If the dollar continues to weaken, then, rather like the price of oil, it’ll be a long time before we see lower gold prices,” said Angus Campbell, head of sales at Capital Spreads, in a note.
“Momentum is also being provided by many investors running to gold as a safe haven in the face of credit woes and high inflation.”
Spot platinum fell to $2,085/2,095 an ounce from $2,098/2,108 an ounce. Palladium eased to $503/508 an ounce from $508/513 an ounce.
Silver edged up to $20.56/20.61 an ounce from $20.42/20.47 an ounce.
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First Published: Fri, Mar 14 2008. 09 57 AM IST
More Topics: Markets | Precious | Gold | Oil | Dollar |