Gold up 2% on firm euro, oil
By Lewa Pardomuan
Reuters
First Posted 11:36:00 10/30/2008
Filed Under: Gold & Precious Materials, Soft Commodities, Metals & Minerals
SINGAPORE -- Gold rose for a fourth straight day on Thursday, rising 2.0 percent at one point, as oil extended gains and the dollar fell against the euro, which stirred hopes bullion could eventually regain $800 on safe-haven buying.
Other precious metals tracked gold higher, with firmer equities also helping prices move away from their multi-year lows. The US Federal Reserve cut interest rates by half a percentage point on Wednesday, sending the US dollar tumbling.
Gold was trading at $768.45 an ounce, up $14.15 an ounce from New York's notional close on Wednesday, when it hit an intraday high of $773.40 an ounce.
"My view is that we're likely to see the gold price continue to move higher in the near term," said David Moore, commodities analyst at Commonwealth Bank of Australia in Sydney.
"I mean it'll probably follow a fairly uneven path but the underlying trend is for gold to be back above $800 an ounce by the end of this year," he said.
Gold plummeted to its weakest in 13 months at $680.80 on Friday after investors cashed in to cover losses in stock markets. It has steadily rebounded with the help of strong oil prices, a recovery in equities and a firmer euro.
Gold, which traded around $800 earlier this month, was still below a record high of $1,030.80 hit in March after a rally to a two-month high of $931 on Oct. 10 was met by heavy selling.
Oil rose more than $2 to above $69.50 barrel due to the dollar weakness after the Fed cut interest rates, which in theory boosts gold's appeal as a hedge against inflation.
The euro rose against the dollar, recovering from a 2-1/2-year low hit this week, as the oil rally spurred investors to pick up currencies battered during a rapid slide in recent months from record highs near $150 in mid-July.
"The dollar seems to be on the downside and that helps gold. But I would say gold will still be trading in a very wide range of $700 to $800 an ounce," said a dealer in Hong Kong.
"There's not much physical buying because the price is at the higher end now," he said.
Japan's Nikkei average climbed 3.9 percent on bargain hunting.
Two of the world's leading gold miners reported big drops in quarterly earnings on Wednesday as soaring costs for fuel and raw materials ate into margins already narrowed by a slumping gold price.
Platinum was trading at $824.00 ounce, up $30.50 from New York's notional close.
New York gold futures added $16.00 an ounce to $770.00.
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