Gold trades at 28-year high
on safe-haven buying By Polya Lesova,
MarketWatch
Last Update: 4:40 PM ET Nov 5, 2007
NEW YORK (MarketWatch)
-- Gold futures traded at their highest level in nearly 28
years on Monday, as renewed turmoil in the credit markets
boosted the metal's safe-haven appeal after Citigroup said
it will have to write off up to $11 billion more in losses.
"Several items of concern
are still fueling the flight to gold," said Jon Nadler,
an analyst at Kitco Bullion Dealers, in a research note. "One
of them [is] the $11 billion in Citigroup write-offs that
have resulted in Mr. Prince losing his crown at the mega-bank.
First Merrill, now Citi. The [fallen] head count is mounting."
Gold for December delivery
rose $2.30 to end at $810.80 an ounce on the New York Mercantile
Exchange. Earlier in the session, gold hit an intraday high
of $813.80 an ounce, a level not seen since 1980.
The record high for Nymex
gold was $875 set on Jan. 21, 1980, and the record settle
was $825.50 set on the same date.
"I still think gold is
moving nowhere but up," said Zachary Oxman, a senior
trader at Wisdom Financial. "Today's rally seems to be
further long-side accumulation off of a continued weakening
dollar."
"I think that long term
the market is predicting further drops by the dollar and is
looking to play the big moves through long side gold,"
Oxman said in emailed comments.
On the currency markets, the
dollar index, which tracks the greenback against a basket
of six major currencies, edged up 0.1% at 76.42. See Currencies.
On Friday, gold futures rallied
$14.80 to finish at $808.50 an ounce on Nymex.
"The ailing dollar, near record oil prices and the developing
and deepening housing and credit crisis are all supporting
the surging gold price," said Mark O'Byrne, director
at Gold and Silver Investments Ltd., in a research note.
Financial turbulence was back
in the news Monday as Citigroup said it will write off another
$8 billion to $11 billion to reflect the declining value of
subprime mortgage-related securities since Sept. 30, leading
CEO Charles Prince to step down.
Crude-oil futures fell sharply,
down nearly $2 a barrel from Friday's highest close on speculation
the economy of the U.S., the world's largest oil consumer,
may be dragged down by the credit crisis.
"In the past, the gold
market influenced far less directly by external macro-economic
factors, would not have made it through the $800 level,"
said Julian Phillips, an analyst at GoldForecaster.com. "However,
in this new global monetary and macro-economically influenced
gold market, gold appears to be holding over the $800 level."
"If it can hold up above
that line, then the path very much higher will be far quicker
than the last $100 climb," he said in emailed comments.
"The investment qualities of gold as a 'contra' investment
are shining brightly, taking it higher and higher."
Also on Nymex, December silver
rose 18.60 cents at $14.785 an ounce, January platinum gained
$3.80 at $1,466.50 an ounce, while December palladium fell
$2.30 at $375.10 an ounce.
Copper for December delivery
fell 2.30 cents at $3.3020 a pound.
Metals stocks decline
Indexes tracking mining and metals shares
fell on Monday. The Philadelphia Gold and Silver Index (XAU:
192.06,) dropped 0.5% at 186.61 points. The CBOE Gold Index
(GOX:
189.27,) slipped 0.7% at 189.27 points and the Amex Gold Bugs
Index (HUI:
436.81, ) fell 0.6% at 436.75 points.
As for sector exchange-traded
funds, the StreetTracks Gold Trust ETF (GLD:
81.00, ) edged down 0.1% at $79.75, the iShares Silver
Trust ETF (SLV:
146.18, ) rose 0.6% at $146.18, while the Market Vectors-Gold
Miners ETF (GDX:
50.44, ) slipped 0.5% at $50.44.
Gold warehouse inventories rose by 1,543 troy
ounces to stand at 7.3 million troy ounces as of late Friday,
according to Nymex data. Silver inventories dropped by 362,541
troy ounces to stand at 133.3 million troy ounces, while copper
supplies fell by 130 short tons to stand at 19,095 short tons.
Polya Lesova is a MarketWatch
reporter based in New York