December 2, 2005
Reuters
SINGAPORE - Gold rose to as high as $505 an ounce in Asia on Friday, its highest level since February 1983, and looked likely to rise further as fund buying resurfaced despite fears of year-end liquidation.
Gold, used as jewelry and investment, has been on the rise as investors diversify their portfolios on worries about geopolitical tensions, such as the threat of terrorist attacks, and inflation.
Spot gold was quoted at $503.60/504.20 an ounce in late trade, up slightly from $503.00/503.75 last quoted in New York on Thursday. Some dealers expected gold to trade in a wide range of between $490 and $510 for the rest of the day.
Gold climbed to $509.20 an ounce in February 1983. Anything above that level will bring the metal to its highest since January 1980, when it hit a record high of $850 an ounce.
"Where do we go from here? I guess if we stay above $500, we may well be targeting $510," said Darren Heathcote, head of trading at N M Rothschild in Sydney.
"The funds are still happily buying, they are still happily holding gold at the moment. But I suspect the longs are still very overbought ... susceptible to a downturn," he said.
The latest weekly report released by the Commodity Futures Trading Commission, a U.S. regulator, showed that speculative net long position in New York's COMEX gold were close to record high levels.
Friday's gains in the spot market were also driven by Tokyo futures, where benchmark October contract on the Tokyo Commodity Exchange rose by the daily 50-yen limit to end at a 15-year high of 1,974 yen per gram as a tumbling yen sparked buying.
The yen's fall beyond the 120 yen level against the dollar lent support to Tokyo gold futures because a weaker Japanese currency usually has the effect of raising the value of yen-based commodities prices.
"We've seen downward corrections this week, but we've also confirmed that prices are very solid," said Shuji Sugata, assistant manager of Mitsubishi Corp. Futures Ltd.
"Gold is unlikely to face major liquidation that would alter the current bullish sentiment." Continued ...
© Reuters 2005. All Rights Reserved.
http://today.reuters.com/news/newsarticle.aspx?type=businessNews&storyid=2005-12-02T083931Z_01_KRA219572_RTRUKOC_0_US-MARKETS-PRECIOUS.xml&rpc=23