Spot gold nears $1,000-mark
Saturday, 15 March 2008
LONDON, Mar 14 (Reuters): Spot gold rose to within striking distance of the $1,000 mark Friday, a level already broken on the US futures market, as a record low dollar boosted the metal's appeal as an alternative investment.
Spot gold rose to a high of $998.70 an ounce before easing to $997.00/997.80 at 1106 GMT, against $991.00/991.80 late in New York Thursday, when it powered to a record of $999.90, according to Reuters' charts.
US gold futures hit an historic high of $1,001.50 Thursday, while the London Bullion Market Association said its members confirmed the spot metal also breached the $1,000-level on some trading platforms the previous day.
The over-the-counter market uses different systems to trade the metal.
"It's a continuation of the same drivers that have been driving gold -- the weak dollar, inflationary concerns, and the biggest factor is people's fears over the financial system," said Robin Bhar, metals analyst at UBS Investment Bank.
"There is more scope for major companies going bankrupt, for the credit crisis continuing. The Fed is cutting rates rapidly but that doesn't seem to be reviving the economy. So people are fleeing into hard assets, away from paper assets like money."
Gold has gained nearly 20 per cent in 2008, driven by buying from investors and speculators on expectations of further interest rate cuts in the United States and record high oil prices, which raised its appeal as a hedge against inflation.
Oil slipped below $110 a barrel as investors took profits after prices hit a record $111 in the previous session, but the depressed dollar was seen limiting losses.
"Trading would continue to be dominated by renewed fears about the perils of a collapse in the value of the dollar and the ever-dimmer prospects for growth in the world's largest economy," said Pradeep Unni, analyst at Vision Commodities.
"Until these two fears persists and speculative demand continues to be well rewarded till date, fresh funds would always creep in, propelling the metal further north."
The dollar hovered near record lows against the euro and investors braced for more losses as worries over the US economy and the financial sector dominated sentiment.
Dollar woes deepened on Thursday after data showing a surprise drop in US retail sales for February, building concern that the economy had slid into a recession.
Spot gold rose to a high of $998.70 an ounce before easing to $997.00/997.80 at 1106 GMT, against $991.00/991.80 late in New York Thursday, when it powered to a record of $999.90, according to Reuters' charts.
US gold futures hit an historic high of $1,001.50 Thursday, while the London Bullion Market Association said its members confirmed the spot metal also breached the $1,000-level on some trading platforms the previous day.
The over-the-counter market uses different systems to trade the metal.
"It's a continuation of the same drivers that have been driving gold -- the weak dollar, inflationary concerns, and the biggest factor is people's fears over the financial system," said Robin Bhar, metals analyst at UBS Investment Bank.
"There is more scope for major companies going bankrupt, for the credit crisis continuing. The Fed is cutting rates rapidly but that doesn't seem to be reviving the economy. So people are fleeing into hard assets, away from paper assets like money."
Gold has gained nearly 20 per cent in 2008, driven by buying from investors and speculators on expectations of further interest rate cuts in the United States and record high oil prices, which raised its appeal as a hedge against inflation.
Oil slipped below $110 a barrel as investors took profits after prices hit a record $111 in the previous session, but the depressed dollar was seen limiting losses.
"Trading would continue to be dominated by renewed fears about the perils of a collapse in the value of the dollar and the ever-dimmer prospects for growth in the world's largest economy," said Pradeep Unni, analyst at Vision Commodities.
"Until these two fears persists and speculative demand continues to be well rewarded till date, fresh funds would always creep in, propelling the metal further north."
The dollar hovered near record lows against the euro and investors braced for more losses as worries over the US economy and the financial sector dominated sentiment.
Dollar woes deepened on Thursday after data showing a surprise drop in US retail sales for February, building concern that the economy had slid into a recession.