Gold ends higher on oil; nears $1,000 Mon Mar 3, 2008
By Frank Tang and Daniel Magnowski
NEW YORK/LONDON (Reuters) - Gold edged closer to $1,000 on
Monday, setting a record high for the fourth straight day
as the dollar tumbled and as crude oil held near an all-time
Silver jumped above $20 an ounce for the first time since
November 1980, while platinum and palladium held near highs.
Spot gold jumped as high as $989.30 an ounce and was at $981.20/982.00
at New York's last quote at 2:15 p.m. EST, up from $973.30/973.75
in New York late on Friday.
A woman holds a gold bar in Bangkok January 30, 2008.
Gold edged closer to the $1,000 an ounce mark on Monday,
setting a record high for the fourth straight day after
the dollar tumbled and crude oil held near an all-time
Gold has gained around 18 percent in 2008 as investors shift
some of their money into the precious metal on expectations
of more interest rate cuts in the United States, volatile
stock markets and fears of rising energy costs.
"People are bullish because the macro-economic backdrop,
especially in the United States, is still deteriorating. There
are a lot of incentives in the market for people to actually
go long on gold at the moment," said Michael Widmer,
metals analyst at Lehman Brothers.
"As long as the dollar remains under pressure, I would
expect that gold prices would continue to rise."
The dollar fell to a record low against a basket of currencies
on Monday, as concerns about the health of the U.S. economy
David Rinehimer, director at Citi Futures Perspective in
New York, said that widespread investor demand and the weakened
dollar -- which had a strong inverse relationship to bullion,
had boosted commodities and gold.
"The price action of gold has limited any real aggressive
selling and prompted hedgers to cover short positions,"
Record high crude oil prices increased gold's appeal as a
hedge against inflation. U.S. crude futures had reached an
all-time peak of $103.95 a barrel. However, crude oil settled
at $102.45 a barrel, sharply off its session peak.
Thomas Winmill, portfolio manger who oversees $290 million
of assets of Midas Fund MIDSX.O in New York, said that a negative
real interest rate environment was prompting investors to
keep allocating funds to hard assets such as gold.
In other bullion markets, U.S. gold futures also rallied
to a record high of $992 an ounce. The active gold contract
for April delivery settled up $9.20 at $984.20 an ounce.
"It clearly needs further weakness in the dollar to
do that (reach $1,000), but it doesn't look inconceivable,"
said Stephen Briggs, economist at SG Corporate and Investment
"Gold is heavily overdue a correction. It has for a
while, but it just doesn't do it," Briggs said.
In other metals, silver rose as high as $20.60 an ounce,
up from $19.80/19.85 an ounce late in New York on Friday,
and was last quoted at $20.29/20.34.
Spot platinum rose to a high of $2,230/2,237 an ounce from
$2,163/2,170 late in New York on Friday. It hit a record of
$2,230 an ounce on February 22 as problems with power supply
disrupted mining in main producer South Africa.
A South African minister said on Friday the country's mining
industry would get priority under measures aimed at cutting
electricity use to solve a power crisis.
Palladium rose to $576/580 an ounce, its highest in more
than six years, from its previous finish of $563/568 late
in New York.
(Additional reporting by Atul Prakash in London and Lewa
Pardomuan in Singapore; Editing by Marguerita Choy)