gold rises to three-week record

  1. SCD
    3,438 Posts.
    Gold rises to three-week record
    From AAP 23/10/2003 07:36:07 AM

    In NEW YORK, COMEX gold thundered to its highest price in more than three weeks on Wednesday, as investors jumped back on the bandwagon, gunning for new bull market highs after a period of profit-taking and consolidation.

    The December contract settled $4.80 higher at $386.80 an ounce. From the day's low at $380.90 it rose more than $7 to $388.00, which marked its priciest since Sept. 30, when the New York benchmark was trading near seven-year highs.

    The Sept. 25 high at $394.80 is in the cross-hairs only $8 away. Many have wagered on prices topping $400 this year.

    Spot gold rose to $386.00/6.50 from $380.50/1.25 at Tuesday's close. London bullion dealers fixed the afternoon reference price at $384.75 an ounce.

    "It finally broke that mundane range of $366-$378 and we're seeing a little bit of followthrough -- technical buying through the $378 level in spot," said a trader at a precious metals firm.

    "People like it; it looks good. It's in spitting distance of $400, so it even feels like it's going to test that," he said.

    A weak dollar and uncertainty about economic growth, profits and violence in the Middle East have encouraged buying of gold as an alternative investment this year.

    The rally has a life of its own, with bulls unfazed by the recent setback and encouraging news on the U.S. recovery.

    A rise in the euro to a 22-day high at $1.1825 Wednesday lubricated overseas buying of dollar-priced bullion. But gold has seemed less influenced than usual by currency movements since rebounding from a seven-week low at $366.50 on Friday.

    "The euro's been rallying. It made a high; that had something to do with it," said a commercial bank gold trader. "The market is definitely in a bullish mood -- 100 per cent."

    The Dow Jones industrial stock average was down 155 points by mid-afternoon, encouraging rotation back into safe havens.

    Analysts said the rally was all the more impressive because gold prices have been moving up in other currencies as well.

    Seasonal demand for physical gold bars and coins from traditional buyers in India and the Middle East is supporting prices in advance of Diwali celebrations and Ramadan.

    Meanwhile, funds have lightened last month's record long position on the COMEX.

    Noncommercial players were net long 76,892 contracts last week, which historically is excessive. But September's 122,000-lot extreme raised the bar and funds are in a comfort zone.

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