Gold hits record $1,150

Reuters | Wed, 18 Nov 2009 17:22
[miningmx.com] -- Gold rose to record highs above $1,150 an ounce on Wednesday as the dollar index languished, boosting interest in the metal as an alternative asset, after largely benign U.S. inflation data.

The metal remains firmly underpinned by technical support after several days of gains, and is likely to break through to further fresh highs in coming sessions after a build-up of momentum, analysts said.

Spot gold hit a high of $1,150.20 an ounce and was at $1,148.50 an ounce at 1431 GMT, against $1,141.50 late in New York on Tuesday.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange also hit a record $1,151.00 and were later up $9.20 at $1,148.60 an ounce.

"This is a sentiment-driven market, which means that should data confirm expectations, the market trades on it, otherwise it ignores it," said Commerzbank analyst Eugen Weinberg.

"The liquidity is still there, risk appetite is still there, the dollar is weak, so all the factors which have been in place for weeks and months are still in place."

The metal is attracting a new wave of investment as it pushes through key technical resistance levels to fresh highs.

"(Gold's) momentum is not down to any particular reason, it is just due to the extraordinary gains seen recently," said Weinberg. "It is attracting new speculative capital."

The euro rose to a session high against the dollar on Wednesday on benign U.S. inflation data, while the dollar index, which measures the U.S. currency's performance against a basket of six others, was still down 0.52 percent.

Other commodities also climbed, with oil rising back towards $80 a barrel and copper to 13-1/3 month highs near $7,000 a tonne. Both have been lifted by the weak dollar.

NON-DOLLAR GOLD CLIMBS

Gold rose in currencies other than the U.S. dollar, reaching its highest since late February in euro and sterling terms, and since May when priced in the Australian dollar.

The physical market was quiet, however, with India's gold demand abating as prices struck fresh record highs after offtake picked up slightly in the previous two sessions, while scrap flow eased on hopes for higher prices.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,113.833 tonnes as of Nov. 17, unchanged from the previous business day.

Gold's strength also lifted other precious metals, with silver hitting a 16-month high at $18.83 an ounce, platinum reaching a peak of $1,463.50, its highest since September 2008, and palladium reaching a 15-month high of $376.

Later silver was bid at $18.71 an ounce against $18.40, while platinum was at $1,451 an ounce against $1,453 and palladium was at $371 versus $370.

"Given the bullish tone in the rest of the complex and increasing investment demand, both metals are likely to test higher in the coming sessions with resistance above pegged at $1,490 and $400," said TheBullionDesk.com analyst James Moore.