Business | Markets
Gold climbs down after hitting a three-week peak above $950
Gold edged down after hitting a three-week high above $950 an ounce yesterday, as a slight recovery in the dollar prompted profit-taking in the metal.
- Reuters
- Published: 00:28 April 18, 2008
- Gold edged down after hitting a three-week high above $950 an ounce yesterday, as a slight recovery in the dollar prompted profit-taking in the metal.
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London: Gold edged down after hitting a three-week high above $950 an ounce yesterday, as a slight recovery in the dollar prompted profit-taking in the metal.
But record high oil prices have lifted gold's appeal as a hedge against inflation and are seen underpinning the market.
Spot gold rose as high as $952.60 an ounce before falling to $942.15/$942.85 at 1432 GMT from $943.90/ $944.70 in New York late on Wednesday, when the metal gained 2 per cent.
"The whole move up was more forex related than anything else. But we also completed the 50 per cent retracement level at $952 and ran into some technical selling," said Simon Weeks, managing director of precious metals at Bank of Nova Scotia.
Heavy feeling
"The market feels a little heavy at the moment. If we break back below $940 then we are back into the old $900-$940 range, but if we break above $952, we could well go back to $1,000."
The euro retreated from a record high against the dollar after Eurogroup head Jean-Claude Juncker said excessive exchange rate volatility was bad for global growth and called euro gains against the dollar "undesirable".
Gold often moves in the opposite direction of the dollar, as the metal is traditionally considered an alternative investment and a safe-haven asset.
But the metal got support from oil, which set a record above $115 a barrel as a fall in US gasoline inventories raised supply shortage concerns ahead of the summer driving season.
"Crude oil is still rising and that's supporting commodities across the board," said Walter De Wet, precious metals analyst at Standard Bank.
"If gold breaks the $950-$954 level, technically we might see a rally higher. But for the metal to test much higher, we need some increased risk aversion and that may come from some really bad US data or poor earnings results." In other markets, US gold futures for June delivery rose $5.7 an ounce to $953.90.
Platinum rose as high as $2,063 an ounce and was last at $2,045/$2,055, up from $2,015/$2,025 in the US market late on Wednesday.
Platinum story
"The platinum story continues to remain favourable, especially now that the spot price seems to be working its way through the $2,040-$2,045 range resistance," Michael Jansen, analyst at JP Morgan Securities, said in a note.
"We continue to believe that the power problems in South Africa will hamstring both output from existing operations and the efforts by miners to bring on new production. We continue to see platinum working its way back towards the $2,200 level."
Silver climbed to a one-month high of $18.74 an ounce before falling to $18.27/$18.32, against $18.28/$18.33 late on Wednesday. Palladium was up $1 at $456/461 an ounce.
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