Gold fights back, up on bargain hunting

Gold fights back, up on bargain hunting
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First Published: Wed, Mar 12 2008. 09 53 AM IST
Updated: Wed, Mar 12 2008. 09 53 AM IST
Singapore: Bargain hunters lifted gold on Wednesday and helped it defy pressure from a steadier US dollar as well as rising stocks, but the metal was struggling to break the $1,000 an ounce barrier.
Gold firmed to $974.20/975.00 an ounce from $971.00/971.80 late in New York on Tuesday, after it earlier hit a low around $964 when the dollar rose after global central banks announced plans to boost liquidity to financial markets.
Gold has dropped nearly 2% since a spike to a lifetime high of $991.90 on 6 March, but dealers said record high oil and expectations of further interest rate cuts in the United States would still attract interest from investors.
“I think we are still talking about $1,000 sometime this year. There are so many bulls in the market,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“We can say the market is consolidating. If it goes above $995, the market will shoot up to $1,000. If it goes below $955, then it may test $950. There’s a bit of bargain hunting but I think investors really don’t know what to do,“said Leung, referring price volatility.
Gold has gained as much as 19% this year.
The dollar steadied on Wednesday after rebounding from record lows against the euro the previous day on the Federal Reserve’s steps to boost liquidity in the banking system which raised hopes that credit conditions might improve.
The Fed’s move sparked a rally in stock markets, with Japanese stocks jumping more than 3%.
In theory, rising stock markets and a firmer dollar will diminish gold’s appeal as an alternative investment.
Other precious metals were below their recent highs.
Spot platinum fell to $2,040/2,050 an ounce from $2,050/2,060 late in New York, off a record high of $2,290 hit on March 4 as speculators booked profits on news that miners in main producer South Africa would get more supply.
But Tokyo platinum futures shrugged off a weak cash market and jumped more 3% as the dollar bounced against the yen.
The benchmark platinum futures contract for February delivery on the Tokyo Commodity Exchange ended the morning session 210 yen per gram higher at 6,619 yen.
“Although concerns about power problem in South Africa have been eased, we are not completely sure about supplies from the country, so we are still worried,” said Hiroyuki Kikukawa, an analyst at IDO Securities in Tokyo.
“Platinum is now in a correction phase after seeing massive fund inflows, but long-term trend for the market is still bullish as concerns over supplies stay.”
Both cash and Tokyo platinum futures have rallied to record high on supply fears after an electricity shortage disrupted mining in South Africa. Spot platinum has risen as much as 50% in 2008.
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange lost $2.1 an ounce to $973.9 an ounce.
Silver edged up to $19.71/19.76 an ounce from $19.61/19.66 an ounce. Spot palladium rose to $488/493 an ounce from $486/491 an ounce.
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First Published: Wed, Mar 12 2008. 09 53 AM IST
More Topics: Markets | Precious | Gold | Platinum | Silver |