Singapore: Gold extended gains on Thursday, moving closer to its recent record, as speculative buying accelerated after the US dollar sank against other currencies and oil hit an all-time high above $110 a barrel.
Gold rose to $984.20/985.00 an ounce from $981.90/982.70 late in New York, partly driven by early buying from Japanese speculators. Gold was within sight of a record high of $991.90 hit on March 6.
“I would expect the market to keep an eye on the weak dollar and high oil prices. That gives the real support for gold,” said Louis Lok, a dealer at Bank of China in Hong Kong, referring to a rebound from recent lows around $964 an ounce.
“I’d expect to see the support level at $975. We will test again the high level of $994 or $995.”
Gold has gone up as much as 19% in 2008, on top of a 32% rise last year, on fears of the inflationary impact of rising energy costs and expectations of further interest rates cuts in the United States, which elevate the metal’s appeal as an alternative investment.
Dealers pegged gold’s upside target at $1,000 an ounce but a lack of buying from jewellers could cap gains. Resistance was at $995 an ounce.
Other precious metals firmed but held below their recent highs.
The dollar fell as far as 100.95 yen on trading platform EBS, the lowest since December 1995. It dropped to a record low against a trade-weighted basket of currencies, taking its losses so far this year to nearly 6%.
Crude oil held near a record on Thursday as the dollar’s weakness outweighed increases in US crude inventories.
Spot platinum was unchanged from late in New York at $2,060/2,070 an ounce.
The benchmark platinum futures contract for February delivery on the Tokyo Commodity Exchange ended the morning session 81 yen per gram higher at 6,572 yen, aided by a surging yen.
In industry news, No. 2 gold producer Newmont Mining Corp said global gold mine output willdecline over the next decade or so because of production constraints and past underinvestment in finding new resources.
Silver edged up to $20.19/20.24 an ounce from $20.04/20.09 an ounce. Spot palladium rose to $499/504 an ounce from $496/501 an ounce.