Sun, Jan 05, 2003 - Page 10 News List

Gold moves above US$350 an ounce on global tensions

BLOOMBERG , NEW YORK

Gold futures rose, closing above US$350 an ounce for the first time since 1997, as a weakening dollar and military tensions in the Middle East and Asia made the metal a more attractive haven to investors.

"The euro, the yen, the Swiss franc are all moving higher, and the political worries are out there," said Marty McNeill, a gold trader at RF Lafferty & Co in New York. "These things won't go away."

Gold prices have risen 9.5 percent in the past month as threats of a US attack against Iraq and concern that North Korea has resumed development of nuclear arms increased demand for the metal. The weaker dollar has made dollar-priced gold cheaper for buyers using other currencies.

Gold for February delivery rose US$5.10, or 1.5 percent, to US$351.60 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing price for a most-active contract since April 1997.

The rally was fueled partly by speculators who bought contracts "anticipating the market will go higher," said Frank McGhee, head trader at Alliance Financial LLC, a gold-trading company in Chicago.

"It's starting to look as if this market has legs," McGhee said, predicting prices may rise as high as US$365 an ounce in the next few days.

Hedge funds and other large speculators as of Dec. 24 had bought 57,105 more gold futures contracts than they had sold, the largest "net-long" position since February 1996, a report last week from the US Commodity Futures Trading Commission showed.

The dollar fell for the seventh time in eight sessions against the euro and weakened against the yen, contributing to the gain for gold, traders said.

Gold-mining shares also rose. The Philadelphia Gold & Silver Index of 11 mining companies rose 2.94 to 80.76 at 3:29pm New York time.

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