Gold soars to historic high
Gold and platinum soared to historic highs yesterday after a power crisis shut South African mines, with a further lift coming from firm oil and expectations of more US rate cuts.
South Africa’s three top gold producers and the world’s biggest platinum miner suspended production at all their mines in the country due to a power crisis.
Gold hit a high of $923.40 an ounce, up more than 8 per cent since tumbling to a three-week low around $850 this week. The metal was at $915.20/916.10 at 1529GMT, against $907.00/907.70 in New York late on Thursday.
Spot platinum XPT hit a lifetime high of $1,697 an ounce.
“Energy is the lifeblood to keep these mines going. South African production is in terminal decline, notwithstanding the five-year bull run in metals, and these outages can only further accelerate their declining position,” Ross Norman, MD at TheBullionDesk.com, said.
“We hold with our view that gold will hit a high of $1,250 this year,” he said.
Gold, traditionally seen as a safe-haven asset and a hedge against oil-led inflation, was also supported by strong oil prices and nervousness in global financial and credit markets.
Oil jumped above $91 a barrel, building on earlier gains.
Bullion investors kept a close eye on the dollar.
Despite the dollar’s marginal gain against the euro, it was seen staying on the back foot in the lead-up to next week’s U.S. Federal Reserve meeting, where markets have priced in the risk for a further 50 basis point cut in the 3.5 per cent rate.
The Fed slashed interest rates by 75 basis points earlier this week in an emergency bid to head off a US recession and halt a global rout in stocks.
A rate cut is often seen as a negative factor for the dollar and investors look for other alternative assets, including gold.
Bullion generally moves in the opposite direction of the dollar.
“Gold’s strongest quarter is going to be the first quarter and we are going to see lower prices later in the year,” said David Holmes, director of metals sales at Dresdner Kleinwort.
“Gold is very much in the headline and there are a lot of supporting factors, including a weak dollar, the stock market turbulence and the possibility of inflation in the US.”
Other bullion markets also surged.
Trading in Tokyo’s gold and platinum futures ended after they rose to their daily limit of ¥120 per gramme.
US gold futures extended gains, with the most active February contract hitting a record $924.30 an ounce.
In other metals, platinum surged more than $90, or 5.7 per cent, to $1,697, before dipping to $1,685/1,690 an ounce, versus $1,606/1,611 in New York.
“In platinum, you have a lot of demand and a lot of potential demand in case oil stays high and diesel (vehicles) become a success in the US,” said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Germany’s Heraeus. (Reuters)
South Africa’s three top gold producers and the world’s biggest platinum miner suspended production at all their mines in the country due to a power crisis.
Gold hit a high of $923.40 an ounce, up more than 8 per cent since tumbling to a three-week low around $850 this week. The metal was at $915.20/916.10 at 1529GMT, against $907.00/907.70 in New York late on Thursday.
Spot platinum XPT hit a lifetime high of $1,697 an ounce.
“Energy is the lifeblood to keep these mines going. South African production is in terminal decline, notwithstanding the five-year bull run in metals, and these outages can only further accelerate their declining position,” Ross Norman, MD at TheBullionDesk.com, said.
“We hold with our view that gold will hit a high of $1,250 this year,” he said.
Gold, traditionally seen as a safe-haven asset and a hedge against oil-led inflation, was also supported by strong oil prices and nervousness in global financial and credit markets.
Oil jumped above $91 a barrel, building on earlier gains.
Bullion investors kept a close eye on the dollar.
Despite the dollar’s marginal gain against the euro, it was seen staying on the back foot in the lead-up to next week’s U.S. Federal Reserve meeting, where markets have priced in the risk for a further 50 basis point cut in the 3.5 per cent rate.
The Fed slashed interest rates by 75 basis points earlier this week in an emergency bid to head off a US recession and halt a global rout in stocks.
A rate cut is often seen as a negative factor for the dollar and investors look for other alternative assets, including gold.
Bullion generally moves in the opposite direction of the dollar.
“Gold’s strongest quarter is going to be the first quarter and we are going to see lower prices later in the year,” said David Holmes, director of metals sales at Dresdner Kleinwort.
“Gold is very much in the headline and there are a lot of supporting factors, including a weak dollar, the stock market turbulence and the possibility of inflation in the US.”
Other bullion markets also surged.
Trading in Tokyo’s gold and platinum futures ended after they rose to their daily limit of ¥120 per gramme.
US gold futures extended gains, with the most active February contract hitting a record $924.30 an ounce.
In other metals, platinum surged more than $90, or 5.7 per cent, to $1,697, before dipping to $1,685/1,690 an ounce, versus $1,606/1,611 in New York.
“In platinum, you have a lot of demand and a lot of potential demand in case oil stays high and diesel (vehicles) become a success in the US,” said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Germany’s Heraeus. (Reuters)
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