Gold Hits New Record £600 for UK Buyers
Commodities / Gold & Silver 2009 Dec 29, 2008 - 09:33 AM GMTBy: Adrian_Ash
THE PRICE OF GOLD jumped once again in thin Asian trade early Monday, adding to Boxing Day's 3% gain to reach an AM Gold Fix in London of $881 an ounce – the best level vs. the Dollar since Oct. 10th.
Trading almost 5% higher from the start of 2008, Spot Gold prices also jumped to a 3-week high against the Euro before slipping lower as the single currency strengthened to $1.4330 on the forex market.
Measured against the British Pound, Gold Bullion continued to hit new all-time highs, breaking above £600 an ounce for the first time ever.
Sterling sank to just 2¢ above parity with the European single currency, down more than 42% from its all-time top of March 2000.
"[Gold is] pushing higher due to increased geopolitical risk in the Middle East," writes Manqoba Madinane at Standard Bank in Jo'burg, pointing to Israel's rocket attacks on the Gaza Strip.
"Further geopolitical tension should inflate the risk premium in current precious metal prices. Barring any significant decline in financial market systemic risk, this should translate into increased upside potential in the near term."
" Gold is obviously gaining a lot of favor as a safe haven asset again," agrees Darren Heathcote at Investec Bank in Sydney, speaking to Bloomberg by phone.
"The weaker Dollar and rising oil prices also helped," he added.
Today crude oil rose almost 3% to break back above $40 per barrel. Base metals held flat as London trade remained thin.
Soft commodities rose pretty much across the board.
"What was surprising was the timing of the violence between Israel and Hamas," noted Adrian Koh at Phillip Futures in Singapore to Reuters this morning. "That's the thing that caught everyone by surprise.
"The markets are still very much in thinned-holiday trade and the news of the violence basically spurred buying and pushed prices past key resistance levels."
Looking ahead to Gold in 2009 , prices "should continue to rally into the New Year," says today's note from Mitsui here in London, "with the initial target the psychological level of $900 and above that the technical resistance at $930 an ounce."
The precious metals team peg minor support at $870, with a firmer floor now sitting at $850.
By Adrian Ash
BullionVault.com
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City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2008
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