Gold trades at 28-year high
on safe-haven buying By Polya Lesova,
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
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
189.27,) slipped 0.7% at 189.27 points and the Amex Gold Bugs
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