Gold holds near 28-year high as dollar struggles

Gold holds near 28-year high as dollar struggles
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First Published: Fri, Sep 21 2007. 10 18 AM IST
Updated: Fri, Sep 21 2007. 10 18 AM IST
Singapore, 21September Gold rose today and held within striking distance of a 28-year high around $738 an ounce as purchases from speculators helped the metal defy selling pressure.
Spot gold gained to $735.40/736.20 from $734.20/735.00 late in New York on 20 September, having fallen to an intraday low of $732.30 an ounce as investors booked profits on a rally that has added more than $90 an ounce in a little over a month.
Gold hit a peak of $738.30 an ounce today -- its best level since January 1980 -- after the dollar tumbled to an all-time low against the euro and record highs crude oil ignited inflation concerns.
“At this point, we are seeing quite strong investor interest in gold,” said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
“If the US dollar continues to edge lower against other currencies, then I think you will see a continued support for gold.”
Gold spiked to an all time high of $850 in January 1980 as high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution prompted investors to heavily buy the precious metal.
Crude oil held near $82 a barrel today after touching a record $84 the previous day as a tropical depression forced the shutdown of Gulf of Mexico output and triggered supply fears ahead of peak winter fuel demand.
Gold is generally seen as a hedge against oil-led inflation.
“The oil price is over $80 today. As we approach the end of this year, gold price will follow oil and reach $800,” said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
Fundamentals looked strong with gold miners globally reducing their hedges, the United States cutting interest rates and consumption in main buyer India expected to reach more than 1,000 tonnes this year, he said.
India’s demand for gold reached 715.5 tonnes in 2006, according to the World Gold Council.
The most active gold futures contract for August 2008 delivery on the Tokyo Commodity Exchange hit a high of 2,747 yen per gram, its highest since August 1985, before dipping to 2,745 yen, still 26 yen higher than Thursday’s close.
“There’s some profit taking but it looks like the Japanese still show interest to buy. I am looking at the next target of $750,” said a bullion dealer in Hong Kong.
“I don’t know whether we are going to touch that level this month because I am sure people will take profit on higher prices, but I would say we will eventually see $750,” he said.
The most-active December gold contract on the COMEX division of the New York Mercantile Exchange rose $3.4 to $743.3 an ounce on electronic trade, having rallied to a 28-year high of $746.5 on Thursday.
The dollar hovered near a record low against the euro and a 15-year trough versus a basket of currencies as investors dumped the US currency after the Federal Reserve surprised markets with a half-point rate cut earlier this week.
Comments from Fed Chairman Ben Bernanke on Thursday that global financial losses stemming from disarray in the U.S. subprime mortgage market has “far exceeded even the most pessimistic estimates” put more pressure on the dollar.
The euro was steady at $1.4065 -- within sight of a record high of $1.4099 the previous day.
The dollar rose as high as 115.00 against the yen as investors sold the yen across the board before the first half of the financial year closes at the end of the month.
“The market may find support $710 and I think $750 will be the upside. There might be a final push to squeeze up the shortists,” said a dealer in Singapore.
In other precious metals, platinum rose to $1,333/1,338 an ounce from $1,323.40/1,330.40 in late New York. It hit an intraday high of $1,335 today-- its highest since 23 July.
Silver inched up to $13.45/13.49 an ounce from $13.36/13.41 in New York.
Palladium rose as high as $338 an ounce, its highest since 16 August, before dipping to $337/341 an ounce, still higher than $336.40/340.40 in New York.
Precious metals prices at 0401 GMT
Metal Last Change Pct chg YTD pct chg Turnover,19,31,40,52,66
Spot Gold 735.40 2.40 0.33 15.68
Spot Silver 13.46 0.09 0.67 4.75
Spot Platinum 1335.00 11.60 0.88 17.93
Spot Palladium 338.00 1.60 0.48 1.81
TOCOM Gold 2745.00 26.00 0.96 12.27
TOCOM Platinum 4926.00 60.00 +1.23 15.80 26355
TOCOM Silver 501.20 12.20 +2.49 1.60 1829
TOCOM Palladium 1282.00 20.00 +1.58 2.15 478
Euro/Dollar 1.4073
Dollar/Yen 114.92
TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce. REUTERS
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First Published: Fri, Sep 21 2007. 10 18 AM IST