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Gold nears high but dollar weighs
Gold advanced yesterday to trade just below a recent historic high on investor buying, but pared gains later as the dollar rose against the euro, traders said.
- Reuters
- Published: 23:40 February 25, 2008
London: Gold advanced yesterday to trade just below a recent historic high on investor buying, but pared gains later as the dollar rose against the euro, traders said.
Silver eased after hitting a 27-year high above $18, while platinum slipped after moving towards its record high. Palladium rose more than two per cent and traded above $500 an ounce.
Gold rose as high as $951.90 before falling to $947.15/$947.85 an ounce at 1109 GMT, against $943.70/$944.50 in New York late on Friday and a recent record high of $953.60.
"There are still some orders in the market and we are very close to the highs, so I think funds and speculators would try to push gold to new highs. Technically, also, it looks good," said Michael Kempinski, senior metals trader at Commerzbank.
"It looks that the first attempt failed as gold traded up to $952 very quickly, but came off. The main focus is on the dollar at the moment and we are likely to see some profit taking."
The dollar rose versus the euro and high-yielding currencies were well-bid as stronger equity markets, on positive news about the US financial sector, boosted investor confidence.
A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil rose above $99 a barrel, supported by Turkey's incursion into north Iraq and fresh flows of speculative money ahead of Opec's meeting in early March.
Expectation
"Gold might advance further today, being supported by all the major fundamental drivers," Dresdner Kleinwort said.
"The US existing home sales are expected to continue the decline, which could fuel speculation on a Fed rate cut at the March FOMC meeting. This would be a short-term supporting factor for the euro against the US dollar," the investment bank said.
The existing home sales data for January is due at 1500 GMT.
Platinum steadied after rising towards last week's record high of $2,192 an ounce. The metal was last quoted at New York's $2,148/2,152 late on Friday.
"We continue to believe that platinum will trend higher over the medium term as investors seek safe havens, a hedge against inflation and protection against a weaker dollar," Dan Smith, analyst at Standard Chartered Bank, said in a report.
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