Gold rallies above $1,000

Gold rallies above $1,000
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First Published: Wed, Sep 30 2009. 09 09 PM IST
Updated: Wed, Sep 30 2009. 09 09 PM IST
London: Gold rallied above $1,000 (Rs48,000) an ounce on Wednesday, as dollar weakness helped the metal stay on track for its best quarterly performance since early 2008.
An ounce is equal to 28g.
US Comex gold futures for December rose $8.90 to $1,003.3. A weaker dollar makes gold and other commodities priced in the US currency cheaper for non-US investors.
“Largely it’s been dollar weakness, it’s going to push precious metals higher,” Standard Bank analyst Walter De Wet said of gold’s recent strength.
“We think gold could reach $1,100 in the next four months,” he added. “There’s a seasonal component in gold demand in the fourth quarter which should support it.”
Bullion has risen some 8% in the past three months while the dollar has shed 4.5% over the same period.The metal is on track to close its best quarterly performance since the first quarter of last year. Gold prices have gained 14% so far this year, also bolstered by technical momentum and concerns about potential inflation.
“The dollar’s going to go down further and that’s going to help gold,” David Thurtell, an analyst at Citi, said. “It can hold over $1,000 for a while,” he added.
Speculative positioning is a concern, however, with record long positions on the US Comex gold futures market still leaving prices vulnerable after sharp losses last week.
India’s gold imports in September were provisionally around 35-40 tonnes, up from August but down by more than a quarter from 54 tonnes a year ago, the head of the Bombay Bullion Association said.
Citi’s Thurtell said higher gold prices were hurting demand from India, the world’s biggest consumer of the precious metal. But the physical market is gathering some support in India as jewellery demand picks up in the run-up to the festive period, analysts said.
The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,094.107 tonnes as of 29 September, unchanged from the previous business day.
VTB Capital said in a note to clients that it expected gold prices to stay fairly close to current levels, with support at $984—roughly near the low hit late last week. “We expect the end of the week to see more volatility and more action, with US and Eurozone PMI (purchasing managers index) data on release.”
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First Published: Wed, Sep 30 2009. 09 09 PM IST
More Topics: Gold | Demand | US | Investors | Dollar |