View Full Version : Gold Surges Near $900 An Ounce

01-10-2008, 09:29 AM
Gold Surges Near $900 an Ounce


By STEVENSON JACOBS – 15 hours ago

NEW YORK (AP) — Gold futures approached $900 an ounce for the first time before retreating Wednesday as high oil prices and nervousness about the U.S. economy pushed the precious metal to a record high for a second straight day.

Other precious metals traded mixed, with oil prices falling slightly and agricultural futures down as well.

Gold prices have climbed sharply in the last year, propelled by dollar weakness versus the euro and record-high oil prices — inflationary signals that often boost the appeal of precious metals as a safe alternative investment.

An ounce of gold for February delivery rose $1.40 to settle at $881.80 on the New York Mercantile Exchange, just beating Tuesday's record closing price. Earlier Wednesday, gold soared as high as $894.40 an ounce — the highest ever — before retreating as investors cashed in profits.

"We did come in for quite a bit of profit taking as we got close to $900," said James Steel, analyst with HSBC. "It's a continuing story, but financial market uncertainty seems to be at the core of propelling gold higher."

Record-high oil prices, unease about the U.S. economy and rising world political tensions — including Sunday's confrontation between Iranian boats and U.S. warships in the Strait of Hormuz — have added to gold's allure as a haven.

"It's highly possible we'll see $900 an ounce before February," said Carlos Sanchez, a precious metals analyst with CPM Group in New York.

Expectations that the Federal Reserve will cut further cut interest rates later this month also fed traders' appetite for gold. Lower interest rates tend to depress a country's currency and drive investors to shift funds to hard assets, like gold.

"As long as the outlook is for lower rates, then we're going keep seeing bids coming into the gold market," Steel said.

The dollar strengthened slightly against its main rivals. The euro bought $1.4661 in morning trading, down slightly from $1.4710 late Tuesday.

The steep rise in precious metals has led consumers to pay higher prices for gold earrings, bracelets and other jewelry in recent months. Still, gold remains well below the inflation-adjusted high of 1980. Gold would need to reach $2,115 to $2,200 an ounce to surpass its 1980 high.

Silver for March delivery added 2.5 cents to settle at $15.840 an ounce on the Nymex Wednesday, while March copper fell 1.5 cents to settle at $3.2835 a pound. Platinum for April delivery fell $5.90 to $1,554.60 an ounce.

Also weighing on investors Wednesday were questions about the U.S. economy and the strength of upcoming corporate earnings reports.

Meanwhile, energy price settled lower on the Nymex.

Oil prices slipped after swelling gasoline supplies offset a tumble in crude oil stockpiles to their lowest level in more than three years. Light, sweet crude oil futures for February delivery fell 66 cents to settle at $95.67 a barrel on the Nymex. February gasoline fell 3.84 cents to settle at $2.4355 a gallon. Heating oil futures fell 2.29 cents to settle at $2.6134 a gallon.

Grain prices traded lower on the Chicago Board of Trade.

Wheat for March delivery fell 18 cents to settle at $8.895 a bushel on the CBOT. March corn shed 1.5 cents to settle at $4.7725 a bushel, while March soybeans slipped 4.5 cents to settle at $12.625 a bushel.

01-11-2008, 06:50 AM
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