Gold shines as war concerns increase safe-haven desire

Gold jumped more than US$8 yesterday on fears that a US-led war on Iraq was imminent, traders said.

"People are afraid the war is really close," said Leon Lee, dealing officer at the Bank of China in Hong Kong.

Gold is traditionally seen as an insurance policy by investors in times of trouble and the yellow metal has been branded by some traders as a "war commodity".

Spot gold was quoted at US$344.75/US$345.50 an ounce at 0716 GMT, higher than New York's last quoted US$336.10/336.90 and up from last week's three-month traded low of US$331.30.

Gold gained US$45 to US$415 when Iraqi forces invaded Kuwait in August, 1990, then fell by US$40 to US$366 when allied forces began action to evict Iraq from the Gulf emirate in January, 1991.

Analysts said that the metal now looked well supported given prospects of a war and a bleak economic outlook.

In other precious metals, silver tracked a firmer gold price to be quoted at US$4.57/60 from US$4.53/55 at the New York close on Friday.

Platinum was quoted at US$695/US$700 from US$685/US$690 and palladium at US$228/US$238 from US$230/235.