November 17, 2005
Bloomberg
Gold rose to a 17-year intraday high in Asian trading as investors bought the precious metal as a hedge against inflation.
U.S. consumer prices are rising at a 4.9 percent annual pace compared with a 3.7 percent increase at the same time last year, figures from the Labor Department showed yesterday. Gold for immediate delivery yesterday rose 2.3 percent, its biggest one-day gain since July 2004.
"The market has moved higher following renewed interest from speculative investors looking for 'safe haven' assets,'' Warwick Schneller, a commodities analyst at Commodity Warrants Australia, said today in an e-mailed report.
Gold for immediate delivery rose as much as $3.40, or 0.7 percent, to $482.70 an ounce, the highest since January 1988. The precious metal traded at $481.90 at 2:31 p.m. Sydney time.
Gold for December delivery rose as much as $4.40, or 0.9 percent, to $483.50 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. The contract traded at $482.50 at 2:11 p.m. Sydney time.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Yesterday's 2.2 percent rally in New York accelerated as the December contract rose above the trendline of $472, spurring buying by traders who follow charts and graphs, said Michael Guido, director of hedge-fund marketing and commodity strategy at Societe Generale SA in New York. A trendline connects recent prices to indicate whether prices are moving higher or lower.
'Inflationary Buying'
U.S. consumer prices in October rose 0.2 percent after a 1.2 percent increase in September that was the biggest in 25 years, the Labor Department said yesterday. Excluding energy and food, prices rose 0.2 percent, after 0.1 percent gains in each of the prior five months.
"High energy prices look like they caused some inflationary buying of gold,'' said George Gero, senior vice president at Legg Mason Wood Walker Inc. in New York, and a director of the Nymex. ``There are whiffs of inflation'' in the consumer price report, such as a 14 percent rise in natural gas last month, the most in five years, he said. ``This report definitely shows inflationary pressures.''
Russia's central bank may double its gold reserves, Maria Guegina, the bank's head of external reserves, said on Nov. 15 in Johannesburg. Argentina's central bank has also said it may increase gold reserves as a hedge against inflation and protection against a financial crisis.
Platinum, Palladium
Among other precious metals, platinum rose to a 25-year high, climbing for a second day, after Johnson Matthey Plc said Nov. 15 that prices may rise during the next six months.
The report ``renewed buying of all platinum-group metals,'' Deutsche Bank AG analyst Peter Richardson said in a report today.
Increased demand from automakers will leave platinum supplies 120,000 ounces short of consumption this year, Johnson Matthey said in the report. A surplus in palladium supplies will narrow to 650,000 ounces from 1.4 million ounces in 2004 because of reduced shipments from Russia, the world's biggest supplier of the metal.
Platinum for immediate delivery rose as much as $7, or 0.7 percent, to $994 an ounce. The precious metal traded up 0.6 percent at $993 at 1:44 p.m. in Sydney.
The metal rose to a record $1,047 an ounce in 1980, Johnson Matthey said earlier this year.
Palladium rose as much as $4.50, or 1.8 percent, to $260 an ounce, the highest since May 3, 2004.
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