Gold, silver hit multi-year highs on oil, dollar
Precious metals zoomed higher on Wednesday on a tumbling dollar and record high oil, with gold trading near its all-time peak, platinum setting a record and silver touching its highest level in 27 years.
Buying was also spurred following uncertainty in the US credit market and expectations that the Federal Reserve will cut interest rates further.
‘There is a flood of money coming into gold at the moment. You can’t really stand in the way. There are hundreds of things that are supporting the market,’ said Jeremy East, global head of metals trading at Standard Chartered Bank.
‘It’s a one-way street at the moment. Strong oil prices, a weaker dollar, subprime issues and a rush into safe-haven—everything is supporting,’ he said.
Spot gold hit a high of $845.50 an ounce, the highest since January 1980 when it was fixed in London at a record high of $850. It was quoted at $839.25/839.95 by 1014 GMT, against $820.90/821.70 late in New York on Tuesday.
Gold has surged more than 32 percent in three months and has doubled in less than three years.
After adjusting for inflation, gold’s record level in 1980 was equal to $2,079 at 2006 prices. The metal surged then on high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the effects of the Iranian revolution.
The dollar fell broadly, hitting a fresh all-time low against the euro and a basket of currencies after comments from senior Chinese officials stirred concerns the central bank might shift reserves away from the US currency.
The euro was also supported by lingering market expectations of a possible US Federal Reserve cut in interest rates in December, and a view that the European Central Bank would keep euro zone interest rates steady for a while.
Momentum buying
A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil prices stormed towards $99 a barrel, closing in on a triple-digit all-time high, driven by the slumping US dollar and concern about a fuel supply crunch heading into the peak demand winter season.
‘The momentum is so strong, I can’t tell you where it’s going to stop. All the factors are in favour of gold,’ said David Holmes, director of metals sales at Dresdner Kleinwort.
The physical sector came to a standstill as rising prices scared off jewellery makers in Asia. Dealers in Singapore also noted selling of gold scrap from Indonesia, which is Southeast Asia’s largest consumer, as holders cashed in on gold’s rally.
In other bullion markets, benchmark Japanese gold futures rose more than 2 percent to hit a 23-year high. US gold futures also jumped, with the December contract trading up $18.6 at $841.90, having hit a high of $848.
Silver was catching up with gold, and rallied to its highest level since January 1981. Spot silver hit an intraday high of $16.19 ounce, before dipping to $15.72/15.76, still up from $15.37/15.42 in New York.
Platinum hit a record high of $1,484 an ounce to track gold’s jump, before dipping to $1,475/1,479, higher than $1,473/1,477 in New York.
Palladium rose to $378/382 an ounce from $375/379 in New York. It hit a high of $382 -- its highest since late April.
Buying was also spurred following uncertainty in the US credit market and expectations that the Federal Reserve will cut interest rates further.
‘There is a flood of money coming into gold at the moment. You can’t really stand in the way. There are hundreds of things that are supporting the market,’ said Jeremy East, global head of metals trading at Standard Chartered Bank.
‘It’s a one-way street at the moment. Strong oil prices, a weaker dollar, subprime issues and a rush into safe-haven—everything is supporting,’ he said.
Spot gold hit a high of $845.50 an ounce, the highest since January 1980 when it was fixed in London at a record high of $850. It was quoted at $839.25/839.95 by 1014 GMT, against $820.90/821.70 late in New York on Tuesday.
Gold has surged more than 32 percent in three months and has doubled in less than three years.
After adjusting for inflation, gold’s record level in 1980 was equal to $2,079 at 2006 prices. The metal surged then on high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the effects of the Iranian revolution.
The dollar fell broadly, hitting a fresh all-time low against the euro and a basket of currencies after comments from senior Chinese officials stirred concerns the central bank might shift reserves away from the US currency.
The euro was also supported by lingering market expectations of a possible US Federal Reserve cut in interest rates in December, and a view that the European Central Bank would keep euro zone interest rates steady for a while.
Momentum buying
A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil prices stormed towards $99 a barrel, closing in on a triple-digit all-time high, driven by the slumping US dollar and concern about a fuel supply crunch heading into the peak demand winter season.
‘The momentum is so strong, I can’t tell you where it’s going to stop. All the factors are in favour of gold,’ said David Holmes, director of metals sales at Dresdner Kleinwort.
The physical sector came to a standstill as rising prices scared off jewellery makers in Asia. Dealers in Singapore also noted selling of gold scrap from Indonesia, which is Southeast Asia’s largest consumer, as holders cashed in on gold’s rally.
In other bullion markets, benchmark Japanese gold futures rose more than 2 percent to hit a 23-year high. US gold futures also jumped, with the December contract trading up $18.6 at $841.90, having hit a high of $848.
Silver was catching up with gold, and rallied to its highest level since January 1981. Spot silver hit an intraday high of $16.19 ounce, before dipping to $15.72/15.76, still up from $15.37/15.42 in New York.
Platinum hit a record high of $1,484 an ounce to track gold’s jump, before dipping to $1,475/1,479, higher than $1,473/1,477 in New York.
Palladium rose to $378/382 an ounce from $375/379 in New York. It hit a high of $382 -- its highest since late April.
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