Gold hits record on weak dollar
Nov 16 2009 13:44
London - Gold touched a fresh high above $1 030 an ounce in Europe on Monday as momentum from recent gains and a slide in the dollar index sparked fund buying of the precious metal.
Gains in gold boosted interest in other precious metals, with platinum, palladium and rhodium all hitting their strongest in more than a year.
Spot gold reached at peak of $1 132.95 an ounce, and was bid at $1 130.60 an ounce at 10:21 GMT, against $1 118.50 late in New York on Friday.
US gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose $14.20 to $1 130.90. Earlier they hit a record high $1 133.50.
The metal now looks poised for further gains, analysts said, with a number of call options, or rights to buy, being placed at elevated levels on US December gold futures.
"There is no reason why over the next few days it can't have a push towards that $1 200 mark before we get to the December expiry for the options positions, which everyone's looking at," said Tom Kendall, precious metals strategist at Mitsubishi.
"There is a large bunch of $1 200 calls December expiry, which are acting as a bit of a magnet for prices at the moment."
Further weakness in the dollar could fuel further buying of the precious metals, as funds turn to hard assets as an alternative to the US currency.
The dollar index slipped as traders sold the US unit in response to a lack of agreement over currencies at a summit of the Asia Pacific Economic Cooperation (Apec) forum in Singapore at the weekend.
Demand for physical gold remained relatively lacklustre, however, with the world's largest gold exchange-traded fund, the SPDR Gold Trust, saying its holdings fell 0.61 tonnes on Friday from the previous day.
Gold traders in India, the world's biggest bullion market last year, shied away from fresh buying on Monday as the metal hit record highs. More scrap is being returned to the market as prices rise, they said.
Gold's gains lifted other precious metals, with platinum hitting $1 426.50 an ounce, its highest since September 2008 and palladium reaching its strongest level in 15 months at $362.
"Positive economic data from Japan overnight and speculation ahead of the release of (metals consultancy) Johnson Matthey's interim report tomorrow lifted both metals to fresh multi-month highs this morning," said TheBullionDesk.com analyst James Moore.
"Both could continue higher, as their fundamentals remain favourable," he added.
Lonmin PLC, the world's third-biggest platinum producer, expects prices of platinum group metals to gradually firm next year before shortages kick in the following year, the chief executive said on Monday.
Later, platinum was at $1 422.50 an ounce against $1nbsp;390, while palladium was at $361 against $353.50. Elsewhere rhodium hit a 13-month high at $2 250.
Silver was bid at $17.80 an ounce against $17.41.
The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its bullion holdings rose 30.56 tonnes, or 0.3%, on Friday from the previous business day to a record 8,954.08 tonnes.
- Reuters
