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Gold Hit $959 and Oil $101, Dollar Falls Record Low

Gold hit record $959 and Oil $101 a barrel, Dollar falls record low on fears of another Fed Cut

Reuters
February 27, 2008

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Gold roared above $955 an ounce on Wednesday to its highest level ever, with investors pouring money into the metal after oil hit a record above $101 a barrel and the U.S. dollar tumbled against other currencies.

Spot gold rose as high as $955.70 an ounce, with buying particularly from investors and speculators in Japan. It was up from $946.60/947.40 late in New York on Tuesday and has gained more than 14 percent this year.

Silver rallied to its loftiest level since November 1980 on investor buying as it was still cheaper than other precious metals. Palladium jumped to its best level in more than six years while platinum hovered below last week’s record.

“Investors are still very concerned about the fluctuations and troubles in other markets,” said Darren Heathcote of Investec Australia in Sydney.

“Let’s just say $970 is not inconceivable. As I guess $1,000 is not inconceivable. There doesn’t seem to be much reason to sell gold,” he said.

The U.S. dollar hit a record low beyond $1.50 to the euro after surprisingly weak U.S. data and comments by the Federal Reserve’s No. 2 official reinforced views that the central bank will keep cutting interest rates. [ID:nT78648]

“The stock markets and oil are going up and that attracts buying interest. Going ahead, we are talking about $970,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, who pegged support at $930 an ounce.

Gold shrugged off any worries about sales by the International Monetary Fund of some of its bullion reserves, which Leung said would be done in stages and in limited quantity and were unlikely to cause a sharp drop in gold prices.

The United States Treasury has reversed its opposition to the sale of a limited portion of the IMF’s more than 3,000 tonnes of gold stocks, the world’s third-largest holding, and was confident Congress would support the move.

U.S. gold futures also hit record highs. Gold for April delivery , the most active contract, on the COMEX division of the New York Mercantile Exchange hit a high of $959 an ounce, up from Tuesday’s settlement of $948.90 an ounce.

In the physical sector, jewellers cashed in on gold’s rise but there was also buying from speculators, who believed there was still room for gains.

“It’s basically two-way trading. There was selling from jewellers in Indonesia but the volume is low,” said a dealer in Singapore, referring to Southeast Asia’s main consumer.

Silver jumped as high as $19.25 an ounce, its best level in 27 years. The metal was last quoted at $18.65/18.70 late in New York on Tuesday.

Spot platinum rose to $2,145/2,152 an ounce from $2,130/2,140 an ounce but off last week’s record high of $2,192 an ounce.

Palladium rose as high as $546 an ounce, its best level in more than six years, up from $523/528 late in New York.

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