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Gold Near $1,000 on Record-High Euro, Surging Oil

Reuters
Wednesday, 5 Mar 2008 | 10:41 PM ET

Gold held near a record high on Thursday, within sight of the next target of $1,000 an ounce as speculative buying persisted after the dollar tumbled to an all-time low against the euro and oil approached $105 a barrel.

Gold Bars
AP
Gold Bars

Silver held near a 27-year high hit on Wednesday, platinum below an historical high, New York's COMEX futures dipped after touching a record around $995 an ounce and Tokyo's platinum futures hit a new peak.

Spot gold was at $985.90/986.70 an ounce, steady from $985.70/986.50 late in New York. Gold powered to another record at $991.80 an ounce on Wednesday as the dollar struck an all-time low against the euro and crude oil surged.

"It's difficult to say at this juncture if we will touch the $1,000 mark. However, we've come reasonably close. I guess it really depends on how long oil prices remain above $100," said Darren Heathcote of Investec Australia in Sydney.

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"If it continues to remain above $100 in the weeks to come, and we still see signs of further weakness in the U.S. economy, then I suspect there will be more and more fund monies and investor monies move towards gold and other commodities as a safe haven."

Gold has gained as much as 19 percent in 2008 as funds, speculators as well as investors poured money into metals on expectations of further interest rate cuts in the United States
and record high oil, which lifted its safe-haven appeal.

"There is psychological resistance at $1,000, but it's a matter of time to see gold break through that level. The trend for the market is very strong," said Shuji Sugata, manager
Mitsubishi Corp Futures and Securities Ltd.

"With the prospect of more U.S. interest rates cut, funds are pouring into gold and other commodities. A weak dollar and bullish oil prices are encouraging more buying in gold."

Crude oil extended gains to approach $105 a barrel on Thursday, aided by OPEC's decision to keep output levels unchanged and U.S. government data showing a surprise decline in crude inventories.

Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $0.2 an ounce to $988.3 an ounce -- off its record high of $995.20 hit on Wednesday.

"It may want to go on through $1,000 and not receive any substantial amount of downward pressure," said Heathcote of Investec Australia. "There may be some profit-taking just ahead of it, maybe some profit-taking at the level. But you know it could quite easily break through it and go on further without so much as a whimper. At this present juncture, it could go anywhere," he added.

The dollar hovered near a record low against the euro as data showing a fall in U.S. private sector employment and a contraction in the service sector reinforced worries of a U.S.
recession.

Silver edged up to $20.78/20.83 an ounce from $20.61/20.66 an ounce, holding near Wednesday's 27-year high at $20.82 an ounce.

Spot platinum rose to $2,260/2,265 an ounce from $2,240/2,247 an ounce. Spot palladium fell to $550/555 an ounce from $552/556 an ounce.

The most active platinum contract on the Tokyo Commodity Exchange, currently February 2009, hit a new record at 7,427 yen per gram before ending the morning session 70 yen
higher at 7,397 yen.

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