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Gold probes 7-month high as dollar weakens

Gold probes 7-month high as dollar weakens
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First Published: Mon, Feb 19 2007. 10 22 PM IST
Updated: Mon, Feb 19 2007. 10 22 PM IST
LONDON: Gold surged to a seven-month high on 19 February because of investor buying as the dollar weakened. Analysts expect the precious metal to push higher over coming days and weeks.
By 1530 GMT, spot gold was quoted at $670.60/$671.30 an ounce versus $669.00/669.70 late on 16 February in New York. Earlier it hit a session peak of $673.20, the highest since 17 July 2006, when it touched $676.
“It’s largely dollar weakness,” said David Thurtell, analyst at BNP Paribas. “We’re going to see more dollar weakness and if that’s the case the outlook for gold is good.”A lower US currency makes dollar-denominated metals cheaper and more attractive for holders of other currencies.
The dollar fell to a six-week low against the euro and a five-week low against the yen on speculation that the US Federal Reserve might cut interest rates in coming months after a run of weaker than expected US economic data.
Analysts said violence in Iraq and bombs on a train going to Pakistan from India were also supporting gold, seen as a haven against rising security risks.Markets are also watching peace talks between the United States, Israel and Palestine.
“Traders will be watching ... to see if the three-way summit between US/Palestinian and Israeli officials will ease existing middle-east tensions,” TheBullionDesk.com said in a note.
However, some dealers think the Lunar New Year holiday breaks would leave gold markets subdued across much of Asia, while the US Presidents Day holiday would dampen interest in North America.
News that speculators raised their net long positions in gold futures in the week to 13 February bolstered sentiment, but traders said gains were checked by a subdued oil prices.Gold is also used as a hedge against oil-led inflation.
Crude oil prices slipped on expectations of warmer weather in the United States, despite the current chill that has raised heating oil demand in the world’s largest energy consumer.News from the World Gold Council that gold demand in Saudi Arabia fell 16.4 % last year from 2005 helped cap gains.
“Oil, holidays, the WGC data have kept the market subdued today,” a trader said. “The DRDGold strike seems to have ended and that will hurt, too.”
Platinum was at $1,216/1,221 an ounce, down from an earlier three-month high of $1,219 and against $1,201/$1,206 in late New York trade on 16 February.
Platinum prices slipped after miners at the world’s second biggest platinum producer, South Africa-listed Implats, ended a strike they started last Friday at the firm’s largest mine over medical issues.Earlier news that miners returned to work on Monday at the Modikwa mine in South Africa after a strike that lasted more than three weeks also put downward pressure on platinum.
About 3,000 workers walked off the job on 26 January at the mine, jointly owned by the world’s biggest platinum producer Anglo Platinum Ltd and African Rainbow Minerals Ltd.
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First Published: Mon, Feb 19 2007. 10 22 PM IST
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