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» Gold at $900/oz in 2008


Gold soars to record high at $861/oz
Reuters
Posted: Thu, 03 Jan 2008

[miningmx.com] -- GOLD slipped on Thursday after touching a record high above $861 an ounce the previous day, but dealers said the metal may test new peaks in coming weeks as oil's surge to $100 a barrel ignited fears of inflation.

Gold soared more than 30 percent in 2007, its biggest annual gain since 1979. The metal's allure as an inflation hedge and a safe-haven investment increased as the dollar tumbled to successive record lows, financial markets reeled from a global credit crunch and crude prices scaled new highs.

"To say we target $1,000 is a little bit optimistic, but there's potential I think in the days or weeks ahead for us to head towards the $880s region," said Darren Heathcote of Investec Australia.

"With all the reallocation of fund money that will be going on in the next week or so, I believe the potential is now for gold to push even higher still. I think we'll probably find support just below the $850 level, probably around $847."

Spot gold dipped to $854.40/855.20 an ounce from $855.70/856.50 an ounce late in New York. It hit $861.10 an ounce on Wednesday, surpassing its previous peak of $850 set in January 1980.

Crude oil eased on Thursday after hitting a lifetime high of $100 the previous day on expectations of thinning U.S. stockpiles, the falling U.S. dollar and geopolitical risks.

"We are in uncharted territory right now. We can say gold is pointing at $900 and maybe $1,000," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

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"Everybody is putting money into gold. I think the downside is limited to around $845," he said.

Gold has also benefited as commodities came into vogue in recent years, fuelled by booming emerging market growth fostered mainly by China's industrial revolution.

Gold was fixed at a record high of $850 an ounce in January 1980 as a surge in inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution sparked buying from investors.

After adjusting for inflation, the 1980 record price was $2,079 an ounce at 2006 prices, while the real average price in 1980 has been calculated at $1,503, according to precious metals consultancy GFMS Ltd.

"There's a potential for gold to try $880," said William Kwan, a dealer at Philip Futures in Singapore.

"When gold hits that level, it will be an unprecedented price level in gold history but there's most likely to be a strong resistance at the $880 level," he said.

In currencies, the dollar was at 109.42 yen recovering from its lowest level in more than a month at 109.21 yen struck on Wednesday. The euro dipped to $1,4714 from Wednesday's highs near $1.4750.

Tokyo's gold futures market was closed for a holiday. The most-active February gold contract on the COMEX division of the New York Mercantile Exchange fell $2.3 to $857.7 an ounce in electronic trade, having risen more than 2 percent in New York.

Platinum rose to $1,540/1,545 an ounce from $1,539/1,544 an ounce late in New York and held near Wednesday's record high of $1,544 an ounce.

Silver eased to $15.14/15.19 an ounce from $15.17/15.22 late in New York.