Gold gained, trading near a nine-month high, as rising tension surrounding Iran's nuclear program spurred demand from investors seeking a haven. Tokyo gold futures reached their highest in 21 years.
The UN Security Council's five permanent members are set today to discuss further sanctions against the Middle East's second-biggest oil producer over its enrichment of uranium. Gold, which often gains during times of geopolitical tension, touched $688.56 on February 23, its highest since May 19. „Given the oil price and geopolitical concerns it seems to have stepped up a level, and has already looked to test $688” an ounce, said Darren Heathcote, head of trading at Investec Bank (Australia) Ltd.
The price may „move on to $700.”Gold for immediate delivery advanced as much as $5.20, or 0.8%, to $687.75 an ounce, and traded at $686.65 at 2:50 p.m. in Singapore. The precious metal has risen by 24% over the past 12 months. Iran, which refuses to stop enriching uranium, ignored a UN Security Council Resolution ordering it to do so by February 21. The country's government says that it wants to develop nuclear technology for research and to generate electricity. The US has said that Iran is pursuing atomic weapons.
The five permanent Security Council members, the US, UK, France, Russia, and China, plus Germany, will gather in London today for talks on a draft resolution that may impose further penalties on Iran. The UN voted unanimously on December 23 to bar the country from acquiring materials or technology that might be used to build nuclear weapons.
President Mahmoud Ahmadinejad yesterday compared Iran's nuclear program to a „train with no brakes,” suggesting that it was unstoppable. Iran „threw away a while ago the reverse gear and brakes,” said the president, who was speaking at an assembly of religious leaders, according to the state-run Iranian Students News Agency.
Gold also gained on higher energy costs, which rose amid the standoff between Iran and the UN. Crude oil for April delivery rose as much as 45 cents, or 0.7%, to $61.59 a barrel at 2:34 p.m. Singapore time. The contract has risen for the past four days, trading at $61.80 on February 23, its highest since December 26. „Iran's nuclear development has increased geopolitical risks in the Middle East,” said Koji Suzuki, a senior analyst at Kazaka Commodity Co. Ltd. There are „fears of inflation caused by rising crude oil prices.”
Gold is expected to gain this week, its eighth straight weekly advance, on the Iranian nuclear tensions, according to 20 of the 27 traders, investors and analysts surveyed by Bloomberg News from Mumbai to Chicago on February 22 and February 23.
Gold for delivery in April rose as much as $5.20, or 0.8%, to $690.90 an ounce and traded at $689.70 at 2:35 p.m. Singapore time in after-hours trade on the Comex division of the New York Mercantile Exchange. Gold futures in Tokyo rose to a 21-year high for the third straight day. Gold for delivery in December 2007 gained ¥34, or 1.3%, to close at ¥2,691 a gram ($692 an ounce) on the Tokyo Commodity Exchange, or Tocom. The price of platinum also advanced to a record on Tocom.
The metal for delivery in December gained as much as ¥87, or 1.9%, to close at ¥4,787 a gram ($1,231 an ounce) in Tokyo, the highest closing since the contract started trading on the exchange on January 26, 1984. „People are pouring both dollars and yen into gold, platinum and other precious metals that are regarded as being safe assets,” said Kazaka Commodity's Suzuki.
Lonmin Plc, the world's third-largest platinum producer, lost a single production shift due to a strike at its largest mine before settling a dispute over the late payment of wages, its largest labor union said. The company, based in London, lost its day shift on February 23 before agreeing to address the workers' concerns, Mxhasi Sithethi, a spokesman for the National Union of Mineworkers, said today from Rustenburg, northwest of Johannesburg.
In India, the price of gold for April delivery rose 38 rupees, or 0.4%, to 9,829 rupees per 10 grams ($692 an ounce) at 12:06 p.m. Mumbai time on the Multi Commodity Exchange. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date. (Bloomberg)