×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Gold hits record above $1,095/oz as dollar wilts

Gold hits record above $1,095/oz as dollar wilts
Comment E-mail Print Share
First Published: Wed, Nov 04 2009. 04 28 PM IST
Updated: Wed, Nov 04 2009. 04 28 PM IST
London: Gold hit record highs above $1,095 an ounce on Wednesday as dollar weakness added to momentum lent to the market by India’s purchase of 200 tonnes of gold from the IMF to push prices through key technical resistance levels.
Gold is now poised to target the psychological $1,100 an ounce level, dealers said.
Spot gold struck a high of $1,095.05 an ounce and was bid at $1,093.55 an ounce at 2:25PM, against $1,084.50 late in New York on Tuesday.
US gold futures on the COMEX division of the New York Mercantile Exchange also hit record highs at $1,096.20 an ounce.
“At the moment, there is technical buying on the back of yesterday’s rally in the aftermath of the IMF/India transaction,” said Alexander Zumpfe, a trader at Heraeus.
“The transaction... reduced the amount of gold that can be sold under the CBGA by 50 percent for the first year.
“Technically, it is looking good and it seems like the market wants to test $1,100 now,” he added.
The International Monetary Fund said on Tuesday it had sold 200 tonnes of gold to the Reserve Bank of India for $6.7 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold’s ascent.
The news sparked a rally that pushed gold through key technical levels, fuelling fresh buying.
Market watchers are now speculating over the destination of the remaining 403 tonnes of gold the IMF has to sell.
“(The) implication is that at least one other central bank may be negotiating to buy gold from the IMF,” John Meyer, an analyst at Fairfax, said in a note.
Weakness in the dollar in early European trade has added to this momentum, dealers said.
The dollar index, which measures the US currency’s performance against a basket of six major currencies, retreated from a one-month high on Wednesday as traders braced for a policy decision from the Federal Reserve.
Bullish
Gold’s ability to rally to record highs despite dollar strength on Tuesday has cheered the market, traders say.
“For the first time in a while gold rallied without the influence of the dollar, which is very bullish,” said Afshin Nabavi, head of trading at MKS Finance.
Gold typically moves in the opposite direction to the dollar. Strength in the US unit makes gold, like all dollar-priced commodities, more expensive for holders of other currencies, and cuts its appeal as an alternative asset.
Oil prices, strength in which also supports gold as a hedge against oil-led inflation, also rose on Wednesday, after a report showed a surprise fall in US crude stocks.
Demand for physical gold showed some signs of life, with holdings of the largest bullion exchange-traded fund, New York’s SPDR Gold Trust, rising nearly 5 tonnes.
However, gold buying in India, the world’s biggest bullion consumer last year, was weak as India gold futures also hit record highs, while dealers reported a rise in scrap sales as consumers took advantage of higher prices.
Among other precious metals, spot silver was bid at $17.45 an ounce against $17.20, tracking gold. Platinum was at $1,359 an ounce against $1,355.50.
Palladium was the biggest percentage riser of the precious metals, up nearly 2% at $331.50 against $324.50.
The metal is benefiting from expectations industrial demand for the autocatalyst material may pick up as car buying recovers in the United States and China, dealers said.
Comment E-mail Print Share
First Published: Wed, Nov 04 2009. 04 28 PM IST
More Topics: Markets | Gold | Bullion | Commodity | World |