Gold extended gains to hit its highest level in nearly a month above $900 an ounce on the back of speculative buying as oil held near record high, raising fears of inflation.Platinum tracked gold's gains and jumped to its highest level in more than months. Speculation that precious metals refiner Johnson Matthey, would release bullish supply and demand outlook report for 2008 also spurred buying.
Spot gold hit a high of $911.60 an ounce, its highest level since April 23, up from $899.55/900.95 late in New York on Friday but remained below a lifetime high of $1,130.80 hit on March 17.
Previous attempts to revisit the record high have been met by heavy profit taking, which saw gold fall to a four-month low at $845 an ounce in early May.
“Whether gold will hold above $900 is a difficult question. Around about $920 should be the psychological resistance for the metal,” said Walter De Wet, analyst at Standard Bank.
“If the dollar can appreciate again to around $1.54 (against the euro), we should see gold becoming down again. Platinum of course remains very well supported from the physical side.”
Oil extended last week's climb that saw prices jump to a record high near $128 a barrel, as concerns over tight fuel supplies overshadowed gains in the US dollar.
In theory, rising crude oil lifts gold's appeal as a hedge against inflation.
Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $9.10 an ounce to $909.00 an ounce in electronic trading.
Spot platinum rose to $2,146.50/2,166.50 an ounce from $2,126/2,141 an ounce late in New York, having earlier hit an intraday high of $2,174 an ounce - its best level since March 7.
“Given the thinner conditions expected this week, and the potential reaction the JM report/Platinum Week related rumors, there's the potential to see the metal push above $2,200 an ounce and even challenge close to the metal's all time highs,” TheBullionDesk.com said in a report.
Platinum struck a record high of $2,290 an ounce on March 4 after a power crisis in main producer South Africa disrupted mining and sparked fear of a supply deficit.
In the physical sector, dealers in Asia noted some selling from speculators who cashed in on platinum's gains but demand from the industrial sector remained solid.
“The automobile and glass industries are aggressive buyers for physical platinum, but retail investors cash in,” said a dealer in Tokyo.
“Our sales today are mostly for the industrial sector,” he said.
The market shrugged off news a wave of xenophobic attacks spread through South African townships and mobs beat foreigners and set some ablaze in scenes reminiscent of apartheid era violence.
In other precious metals, spot silver rose to $17.12/17.17 an ounce from $16.90/17.00 late in New York.
Spot palladium firmed to $445.50/453.50 an ounce from $443/451 on Friday. (Reuters)