News // Metal market
Gold Near Strongest Level in Weeks
20 November 2008 , 08:59934
Gold was steady near its strongest level in more than a week on Thursday as bargain hunting from investors and jewellers in Asia helped the metal defy selling pressure from weak oil prices and slumping equities.
Recent gains in the yen against the U.S. dollar spurred buying from speculators in Japan, while physical demand kept premiums for gold bars steady in Singapore, Hong Kong and Tokyo.
Gold was trading at $738.05 an ounce, up $5.65 from late New York levels on Wednesday, when it hit an intraday high of $762.30 an ounce due to early gains in oil.
"I think people in Asia are happy to buy at below $750. People are happy to buy at these levels because they still think the banking sector is not safe," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"Even though governments say they will guarantee savings, people are shifting some money from banks to buy physical (gold)," he said.
Gold is struggling to sustain an uptrend since hitting a two-month high of $931 in early October as sell-off in equities forced some investors to cash in on bullion to cover losses.
A rout in Asia pushed world stocks to their lowest in 5-A½ years on Thursday, while oil dropped to below $53 a barrel and government bonds surged as economic data indicated a global recession could get even uglier.
Gold was well below a lifetime high of $1,030.80 struck in March but dealers said falling prices also attracted buying.
The World Gold Council said global demand for gold jumped 18 percent year-over-year to 1,133.4 tonnes in the third quarter, reversing a weaker trend earlier this year, because of strong buying by investors and a lower gold price.
"I guess gold and platinum are relatively cheap for people in Japan because of recent gains in the yen against the dollar," said a dealer in Tokyo. "Some people have also sold their gold bars to buy platinum because the price has dropped so much."
Premiums for gold bars were steady at $2.5 to $3 an ounce to the spot London prices in Tokyo, and dealers said demand in main consumer India was steady during the marriage season, when parents give gold to their daughters for financial security.
Platinum was trading at $795.00 an ounce, down $13.50 from New York's notional close. The price has dropped more than 60 percent since spiking to a record of $2,290 in March to track lower gold, and lately due to tumbling car sales.
The dollar edged up at 95.83 yen but dealers said U.S. currency may be vulnerable due to concerns about U.S. corporate earnings and expectations the Federal Reserve would cut interest rates again next month.
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