Gold swept higher by safe-haven demand
London, September 14, 2010
Gold rose on Tuesday to within less than one per cent of record highs after weak German data knocked equities and the euro, prompting a flurry of safe-haven buying, while silver and palladium touched multi-month highs.
Palladium, used mainly in autocatalysts, struck four-month highs as a combination of fund buying and growing prospects for industrial demand lifted prices.
Spot gold was at $1,253.85 an ounce by 1055 GMT, up from $1,245.25 the day before. US gold futures for December delivery were last up $8.40 an ounce at $1,255.50.
'All four precious metals are really keeping a very close eye on the US dollar right now and if the dollar doesn't 'shape up,' as such, this safe-haven buying will continue in the precious metals,' said Afshin Nabavi, head of trading at MKS Finance.
A raft of economic data from both the euro zone and the United States should offer further proof of the health of both regions and will be particularly important in whetting investor appetite for gold.
'People will be looking at that for some direction, but overall, I would say given the economic situation in the US as well as ongoing geopolitical tensions we are pretty much on our way towards breaking $1,265 and thereafter, up to $1,300,' Nabavi said.
The euro slid against the dollar after an indicator of German economic sentiment fell unexpectedly in September.
The dollar extended losses on Tuesday to hit 15-year lows against the Japanese yen and plumbed nine-month lows against the Swiss franc, another key safe-haven asset, while euro zone government bond yields also declined.
Gold is on track for a near-14 percent rise this year, fuelled primarily by investors seeking an alternative to volatile currencies, equities and some sovereign bonds as economic data has cast doubt on the global growth outlook.
Although the price is now less than 1 percent below late June's record-highs, the market is now in the full throes of the buying season in some of the world's biggest consumers.-Reuters