Business | Markets
Gold hits 10-day high at $939.30
Gold firmed to a 10-day high yesterday, as a weaker dollar and strong oil prices lifted the metal's appeal and attracted investors into the market.
- Reuters
- Published: 01:00 April 11, 2008
London: Gold firmed to a 10-day high yesterday, as a weaker dollar and strong oil prices lifted the metal's appeal and attracted investors into the market.
Spot gold climbed as high as $939.30 an ounce and was at $937.80/$938.60 at 1015 GMT from $932.50/$933.30 late in New York on Wednesday.
"Market sentiment is positive. If later in the quarter, the dollar does take another leg lower, it will be perceived to be the excuse to jump back into gold and push it through $1,000 again," said David Holmes, metals analyst at Dresdner Kleinwort.
"But the market is already long gold and we are going to find another set of investors to take us on the next leg on the upside," he added.
The dollar fell against the euro and hovered close to all-time lows, with investors expecting the European Central Bank to hold interest rates with little prospect of any signal that they will come down soon.
Apart from the rate decisions, investors were also cautious before a weekend meeting of the Group of Seven economic powers which will tackle the global financial crisis.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil traded near record highs set on Wednesday, when a sharp fall in US crude and fuel stocks rekindled concerns about summer supplies and boosted buying.
Ultimate asset
"Gold's role as an ultimate monetary asset is growing in confidence amongst the investors and that is widely seen from accelerated investment demand," Vision Commodities said.
"The market is still in favour of bulls and occasional slides to key supports shouldn't question the long term trend."
Spot gold hit a record high of $1,030.80 an ounce on March 17 before falling to a two-month low of $872.90 last week in a broad commodities sell-off. It has recovered since then.
US gold futures also gained, with the most active June contract trading $4.10 an ounce higher at $941.60.
In industry news, South African gold output fell 28.2 per cent year-on-year in February, official data show-ed.
South Africa's mining sector has been hit by a power crisis, with utility Eskom cutting electricity supply to 90 per cent at the end of January before upping that to 95 per cent in March.
Platinum rose to $2,030/$2,040 per an ounce from $2,018/$2,025 in New York.
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