Gold powered to a new high around $973 an ounce on Friday after crude oil set an all-time high of above $103 a barrel, igniting another round of buying from investors and speculators.Palladium jumped to its highest level in more than six years and silver matched a 27-year peak struck on Thursday. Platinum rebounded from its lows but given the absence of new developments in South Africa's supply problems, gains are likely to be capped.
Gold jumped as high as $974.20 an ounce, up from $968.90/969.70 late in New York on Thursday. Gold has gained more than 16% this year, and the next upside target pegged by dealers was $1,000.
Record high oil and expectations of more interest rate cutsin the United States add to inflation pressures, elevating gold's appeal as a hedge against rising prices, while volatile stock markets have encouraged investors to shift some of their money into gold and other precious metals.
“The target is $1,000. I personally hope it will be $1,000 within a month,” said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, adding that gold was likely be driven by movements in oil in coming weeks. Crude oil rallied to another record above $103 a barrel as Ecuador shut a key export pipeline and a fire hit a major European natural gas plant.
While oil is at a record price in inflation-adjusted as well as nominal terms, gold has lagged. According to analysts at GFMS gold's inflation-adjusted record is $2,079 an ounce.
“Most of the funds are buying inflation hedges such as gold, silver and oil. It's still a bull market, where hedge funds and banks buy precious metals,” said William Kwan, a dealer at Phillip Futures in Singapore.
“I think inflation is really getting out of hand. I am looking at $955 for support and resistance at $985,” said Kwan, who pegged upside target for silver at $20.
Silver matched Thursday's 27-year high at $19.83/19.88 an ounce, up from $19.74/19.79 an ounce in New York.
The dollar tumbled to a three-year low versus the yen and held near record troughs against other currencies after Federal Reserve chief Ben Bernanke warned some small US banks could fail, suggesting that interest rates may fall more.
Spot platinum rose to $2,145/2,152 an ounce from $2,135/2,140 an ounce late in New York to track a rebound in Tokyo futures. Platinum has dropped more than 2% since last week's record high of $2,192 an ounce.
Automakers, who had bought the metal on fears of further price hikes and mining disruptions in South Africa, were on the sidelines, waiting for a correction, said Sonoda of Daiichi Commodities.
“Car makers are waiting for the price to decrease to $2,000,” he said.
Platinum, used in jewelry and auto catalysts, has jumped more than 40% this year after mines in South Africa, accounting for 80% of world output, were shut for five days at the height of last month's power crisis.The most active February 2009 contract on the Tokyo Commodity Exchange hit a low of ¥6,839 per gram before funds bought on dips and pushed up the contract to a high of ¥7,069. It was later quoted at ¥7,025, up ¥8 from Thursday's close. (Reuters)