Gold ends higher on oil; nears $1,000 Mon Mar 3, 2008
3:52pm EST
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 high.
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
high.
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 intensified.
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," Rinehimer said.
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 Banking.
"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)