Gold Touches 6-Year High, Oil Nears 2-Year Peak

Jan. 6, 2003
By Richard Baum

SINGAPORE (Reuters) - Gold nudged its highest level for six years Monday, oil hovered near a two-year peak and the dollar dipped as signs the United States and Britain were preparing troops for an attack on Iraq kept markets volatile.

But stocks rallied in Asia, led by a surge in Tokyo, as investors set aside war fears temporarily to focus on hopes for a recovery in the U.S. economy.

"Markets have accommodated the prospect of a U.S.-Iraq conflict and the strong stimulus being delivered in the U.S. and Europe... should encourage stronger consumer spending, economic growth and corporate recovery," said Michael Wilson, chief investment officer at Ausbil Dexia in Australia.

Japanese investors returning from holidays marked by news of preparations for a possible war on Iraq piled into the safe haven of the bullion market. That sent gold briefly back to touch $353.75 an ounce, a six-year high set last month, before it eased to around $352.55 at 0600 GMT.

"We are... seeing the mobilization of troops in the Gulf and this is keeping the market on edge," said Gordon Cheung, director of precious metals trading at Mitsui Bussan in Hong Kong.

The U.S. military has put at least 275 Army Reserve units involving more than 10,000 soldiers on alert to be ready to move overseas, USA Today reported Monday. Britain will begin deploying its troops to the Gulf on January 15, the Sunday Times reported.


OIL GAINS, DOLLAR SLIPS

The war preparations and the second month of a national strike in Venezuela kept oil prices on the rise, despite pledges from Saudi Arabia and Russia that they would keep their crude supplies flowing to world markets in a bid to calm prices.

U.S. crude was up five cents at $33.13 per barrel after rising as high as $33.33, just short of a two-year high of $33.65 hit last week.

The war worries left the dollar struggling against the yen, but traders, fearful of central bank intervention, were wary about selling the greenback too heavily.

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