Monday, December 05, 2005

Platinum Tops $1,000; Gold Is Next. - Reuters.

SINGAPORE - Gold set a fresh 23-year peak in Asia today on continued fund buying fuelled by inflation concerns, upbeat fundamentals and investment funds’ strong appetite for commodities.

Despite fears of looming fund liquidation, runaway bullion prices helped boost other precious metals, with platinum hovering above $1,000 an ounce at a near-26-year high while silver hit an 18-year record.

Spot gold briefly hit $508,25/509,00 an ounce before easing to $508,00/508,80, against $503,00/503,80 last quoted in New York on Friday.

Gold, used in jewellery and as an investment, climbed to $509,20 an ounce in February 1983. Anything above that level will bring the metal to its highest since January 1980, when it hit a record $850 an ounce.

"The overall feel in the market at the moment is (of) diversification away from the U.S. dollar and other currencies into gold and also from shares into gold," said a bullion dealer with a major foreign bank in Singapore.

Dealers said the spot bullion market has also been supported by strong buying interest in Japan in recent weeks.

Gold futures on the Tokyo Commodity Exchange rose further today to a 15-year high as the yen’s sharp fall to a 32-month low against the dollar supported a buying spree, with the benchmark October 2006 up 42 yen per gram to 2,016 yen.

A firmer dollar usually has the effect of raising the value of yen-based commodities prices, but it makes dollar-based gold less attractive to investors with other currencies.

"We’ve seen gold break the correlation with the dollar in recent times," said Darren Heathcote, head of trading at N M Rothschild in Sydney. "We saw gold strengthening even though the US dollar was strengthening."

"There was a significant drive in Japan in recent weeks. People are very happy to be jumping on the bandwagon and basically riding the thing up," he added.

Japan’s economy has outstripped expectations and there would be some fears of inflation coming through, Heathcote said.

"In the currency market ... the fact is inflation is fuelled by the weaker yen as far as the Japanese are concerned because they are importing a considerable number of goods," he said.