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Gold Rises Above $836

Gold sees 2-week peak as investors run for safety

Reuters
November 26, 2007

LONDON (Reuters) – Gold prices jumped to two-week highs on Monday as investors sought refuge from financial market uncertainty, the dollar slipped and oil prices held firm near record highs.

Platinum hit a record high of $1,486 an ounce on worries about falling supplies from South Africa after the country’s biggest union said last week it was planning a strike against the mounting number of mine deaths.

Spot gold hit $836.70 a troy ounce, the highest since November 9 and was up at $836.15/836.85 by 5:43 a.m. EST, compared with $821.20/821.90 late in New York on Friday. Earlier this month it hit a 28-year high of $845.40.

The dollar was within striking distance of record lows against the euro as investors sold on concern about the health of the U.S. economy and expectations of further rate cuts from the U.S. Federal Reserve.

“The dollar is weak and that means there is a general uplift for metals,” said Dan Smith, analyst at Standard Chartered.

“It’s also a safe-haven in terms of the credit crisis.”

A falling U.S. currency makes dollar-denominated metals cheaper for holders of other currencies, while gold is seen as a hedge against financial market turmoil and inflation, which is often sparked by rising oil prices.

Crude oil was trading above $98 a barrel, within sight of the all-time high of $99.29 hit last week.

“Oil is down a little bit, but not much. It’s still high enough to make people think about inflation,” a London-based trader said. “The credit market freeze hasn’t shown any signs of thawing.”

WATCHING EQUITIES

Traders expect gold prices to stay at current levels and possibly test the record high of $850 an ounce set in January 1980, but they think that another downturn in equity markets could see gold prices fall.

Over the course of this year, many investors have sold gold to cover stock market losses, while others have cut their holdings of the precious metal alongside other investments to take their portfolios back to neutral.

But for now, gold markets around the world are taking their cue from the dollar and oil prices as can be seen in the rising value of gold in other currencies such as the euro and Australian dollars.

“Strong buying has been seen this morning … as dollar weakness and high oil prices again prove supporting for the precious metals,” TheBullionDesk.com said in a note.

“Given the oil/dollar scenario, and the likelihood for further credit-related fall-out, the outlook for gold still remains bullish, with $850 still the clear target.”

Read Full Article Here

Gold Breaks New Record Highs vs. Sterling and Aussie Dollar as Bear Market Looms for Global Stock Markets
http://news.goldseek.com/GoldSeek/1196078940.php

 


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