Gold hits new record high price
Gold pushed to a fresh record high just below the key $1,350 level on Wednesday, riding on dollar weakness and market anticipation that the U.S. Federal Reserve may ease policy to stimulate economic growth.
Spot gold rose as high as $1,349.80 ounce earlier in the day, its eighth record in the past two weeks, before easing to $1,347.50 by 0555 GMT (1:55 a.m. EDT).
U.S. gold futures also hit a fresh all-time high of $1,351 an ounce.
Economic uncertainties and weak dollar have helped gold rally 8 percent from a month earlier and 23 percent so far this year. Traders and analysts expected the momentum to stay after a surprise interest rate cut from the Bank of Japan fueled anticipation of more monetary easing from the Fed.
“The BoJ announcement yesterday to keep rates low signaled more QE (quantitative easing) in the market, and investors are losing interest in currencies and buying gold,” said a Singapore-based trader, expecting the next resistance level for gold at $1,350.
“For now gold is the asset of choice.”
Technical analysis showed that gold may move toward $1,355 an ounce as indicated by an upper channel, according to Reuters market analyst Wang Tao.
The Relative Strength Index on gold rose to 86.04, the highest in 11 years, showing a significantly overbought market.
The dollar fell to its lowest against a basket of currencies .DXY in more than eight months.
“The momentum is still very strong — physical demand is good, the dollar is on the downside, people are worried about inflation,” said Peter Fung, head of dealing department at Wing Fung Precious Metals, “People are selling the dollar and buying gold.”
Traders expected to see profit-taking after China’s markets reopen on Friday after a week-long National Day holiday, at prices above $1,340 level. But pull-backs would be brief thanks to growing interest in bullion.
“People are going to try to buy gold on the dips, but if they want to buy more, the price doesn’t matter,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.”
On the physical market, there was light scrap selling from Thailand and short-covering from speculators, a Singapore-based dealer said.
“Weakness of the dollar has created havoc. I reckon clients will have to take a breather and see where is the market is heading,” said the dealer.
Spot silver rose to a fresh 30-year high of $23.05 an ounce, before easing to $23.00.
Investor interest in silver continued to rise. Holdings in the iShares Silver Trust, the world’s largest silver-backed exchange-traded fund, rose 94.32 tonnes to a new all-time high of 9,877.20 tonnes by Oct 5.
Platinum group metals rose along with gold. Platinum hit $1,705.50 an ounce, highest since mid-May, before easing to $1,702.5. Palladium matched a 2- year high of $581.5 and was trading at $577.75 an ounce.
Source: Reuters