Gold back near record high as New Year comes in


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12 مارس 2007
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Unrest in Pakistan and a weak US dollar are the driving forces which could take the gold price to this year's top levels today an threaten the all time high of $850 an ounce
Author: Lewa Pardomuan
Posted: Monday , 31 Dec 2007

SINGAPORE (Reuters) - Gold rallied to a 7-week high on Monday and close to a record high of $850 on speculative buying driven by a weak U.S. dollar and tensions in Pakistan following the assassination of opposition leader Benazir Bhutto.
But thin trading in Asia ahead of the New Year holidays meant gold and other precious metals were prone to sharp fluctuations. Platinum dropped but held near last week's record high of $1,542 an ounce.
Spot gold hit an intraday high of $842.90 an ounce before dipping to $842.00/842.80. This was still higher than $837.80/838.50 late in New York on Friday.
"There's still a potential for further unrest in Pakistan following Bhutto's assassination. I guess there's a potential for us to push higher and test the highs around $847 at least," said Darren Heathcote of Investec Australia in Sydney.
"I think $847 will be the initial technical point to breach. When London comes in, more stops get taken out," he said.
Gold hit a record high at $850 January 1980 on high inflation linked to high oil prices, Soviet intervention in Afghanistan and the effects of the Iranian revolution. After adjusting for inflation, that level was equal to $2,079 at 2006 prices.
Gold has risen more than 30 percent this year -- the biggest annual gain since 1979 -- as a number of factors, including a weak U.S. dollar, record-high crude prices, credit market turmoil and falling U.S. rates, boosted its safe-haven appeal.
The latest safe-haven buying was sparked by Bhutto's killing last week, which plunged Pakistan into crisis. Electoral officials hold an emergency meeting on Monday to decide whether to go ahead with a January election that is aimed at shifting the country from military to civilian rule.
Bhutto's killing in a suicide attack on Thursday triggered bloodshed across the country and rage against President Pervez Musharraf, casting doubts on nuclear-armed Pakistan's stability and its transition to civilian rule.
"I think it's possible to touch $850 in the near term. It moved in a massive range already in the past 24 hours," said David Moore, a commodity analyst at the Commonwealth Bank of Australia in Sydney.
"It's possible it might go higher in the near term. It's obviously been supported by a number factors but probably the thin trading conditions are sort of exacerbating the movements in the gold price at the moment," he said.
The dollar was under pressure Monday as expectations of more U.S. interest rate cuts enhanced the euro's yield advantage, while the yen benefited from a reluctance to hold risky positions over the holidays.
The euro was hardly changed at $1.4715, compared to $1.4714 late in New York on Friday and just off a two-week high of $1.4727. The dollar was barely moved at 112.60 yen, having fallen almost a full percent on Friday to 112.63

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