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gold powers to record high

  1. 950 Posts.
    lightbulb Created with Sketch. 28
    Hi all, only a matter of time before the smaller spec stocks such as Excalibur Mining Corp take off. EXM drilling in one of the highest prospective gold locations in Australia. Initial results beginning to unravel what could be a gold elephant! ;)

    ps Interesting reading.
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    Gold powers to record high, eyes $1,000/oz
    By Atul Prakash of Reuters

    LONDON -- Gold set an historic high above $US975, propelled by speculative buying on the back of record high oil and a lifetime-low dollar against the euro.

    The metal pared gains later as some investors took profits, but market sentiment remained bullish. Silver jumped to a 27-year peak near $US20 an ounce before falling, while palladium surged nearly 4 per cent to its highest in more than six years.

    Gold set a record for the third straight day, hitting $US975.90 an ounce before falling to $US971.10/971.85 at 0309 AEDT, versus $US968.90/969.70 in New York late on Thursday. It has risen 16 per cent this year on the top of 32 per cent rise in 2007.

    "All the newsflow coming out of the US is hugely bullish for the gold market. In the end, what lower interest rates mean is that it will be difficult for the dollar to come back strongly," said Michael Widmer, analyst at Lehman Brothers.

    "Inflationary pressures are something that are also playing into the market. Fundamentals are strong and I think $US1,000 would not be an end. We are going to go higher from there."

    The dollar lingered near record lows against a basket of major currencies, pressured by concerns about the US economy and expectations of further aggressive interest rate cuts.

    A report indicating that US core inflation, which the Federal Reserve watches, matched economists' median forecasts had little impact on investor expectations for rate moves. Core prices strip out volatile food and energy costs.

    A rate cut tends to weaken the dollar as investors shift assets for better returns. A weaker dollar makes gold cheaper for other currency holders and lifts metal demand. Gold is also seen as a hedge against oil-led inflation.

    Oil prices fell more than $US1 after hitting a record peak above $US103 a barrel.

    "It looks very likely that we will go above $US1,000," Michael Lewis, global head of commodities research at Deutsche Bank, said in London.

    "The next focus is the degree of Fed easing at the next FOMC meeting on March 18. So that would be another possibility that we would start to see dollar weakness accelerating," he said, referring to the US Federal Open Market Committee.

    "There is a non-linear relationship between gold and the dollar, whereby incremental weakening in the dollar has a bigger impact on the gold prices," he added.

    Inflation adjusted prices

    While oil is at a record price in inflation-adjusted as well nominal terms, gold has been lagging. According to analysts at metals consultancy GFMS Ltd, gold's inflation-adjusted record high was $US2,119 an ounce at 2007 prices.

    Gold quoted in euros has jumped 26 per cent to above €641.83 in the past 12 months, while in terms of the dollar, it has surged 44 per cent during the same period.

    "While gold's movements over the past 24 hours have pushed the metal back into overbought territory, its does appear that the scale of demand is sufficient to propel gold to $US1,000/oz," said James Moore, metals analyst at TheBullionDesk.com.

    In other metals, silver rose to $US19.92 an ounce before falling to $US19.65/19.70, versus $US19.74/19.79 in New York. Palladium hit a high of $US582 an ounce and was last at $US565/570, against $US560.00/564.00 late in New York.

    Platinum rose to a high of $US2,161 an ounce and was last at $US2,153/2,163, versus $US2,135/2,140 on Thursday and last week's record of $US2,192.

    Platinum, used in jewellery and auto catalysts, has jumped more than 40 per cent this year after mines in South Africa, accounting for 80 per cent of world output, were shut for five days at the height of last month's power crisis.

    A South African minister said on Friday the country's mining industry would get priority under measures aimed at cutting electricity use to solve a power crisis.
 
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