Daily Gold Update

Source: Reuters

New York— Gold futures in New York rallied for a seventh straight session on Friday, hitting another 24-1/2 year peak, as speculative buying and a lack of profit-taking continued to dominate the market, dealers said.

Other precious metals futures also blazed to new heights, with silver extending Thursday's move above $9.00 an ounce to an 18-year peak, while platinum was up above $1,000 and palladium topped $300 for the first time since April 2004.

At the New York Mercantile Exchange's COMEX division, February delivery gold surged $10.30, or 2 percent, to $533 an ounce by 10:46 a.m. EST.

The session peak of $534.40 was the highest price for benchmark futures since April 1981.

Gold has climbed 7 percent this month alone, and 21 percent in 2005, as bullish supply/demand fundamentals and weakness in currencies and equities increasingly attract investors and money managers to the precious metals complex, analysts said.

Heavy buying by traders in Japan over the past week has helped fuel the rise, while renewed strength in crude oil also has lent support by fanning mild concerns over inflation.

"The funds are still buying gold, and nobody's stepping in in front of it," Jimmy Quinn, an AG Edwards & Sons commodities commentator, said at the floor of the COMEX.

"Whatever selling you see seems to be some profit taking. The market pulls back a little bit, but then a new wave of buying comes in again," he said. "Volume has picked up and, clearly, the breadth of the market is to the upside."

Analysts have said prices have room to extend gains in gold's longest run-up since the U.S. market was deregulated by the early 1970s, on uncertain outlooks for the economy as well as international political affairs.

"People are saying 'when is (the rally) going to stop?' But it is not overpriced when you compare it with other markets, like platinum at $1,000 and copper at $2 a lb.," said George Nickas, vice president of sales at FC Stone in New York.

By comparison, in the 1980s, copper was seen as overpriced when it was up at $1.30 a lb., while gold at that time got as high as $850, which left scope for more gains now, he added.

"Copper is now at $2, and it's been here for a while. I guess gold can be higher," Nickas said.

The record high for gold futures, hit in January 1980 after the oil shock and recession of the 1970s, was $873.

Although gold appears technically overbought and is likely due for a bout of fund selling at some point, many analysts doubt the rally will end soon.

"… Gold is still at risk to long liquidation by investment funds," Standard Bank said in a daily note. "(But) broadly supportive fundamentals and a bullish commodities market sentiment should negate such fears in the interim."

Market watchers put resistance at the psychological level of $550, and then at $560, while support rests down at $510, $500 and $497.

Spot gold touched a 24-1/2-year high of $530.40, and by midmorning it was quoted at $529.30/530.10, versus $519.50/520.30 at Thursday's New York close.

Friday's afternoon fix in London by bullion dealers was at $525.50.

COMEX March silver climbed 12.5 cents to $9.115 an ounce, dealing from $8.985 to $9.14 — a price not seen since May 1987. Spot silver was worth $9.01/04, up from $8.88/91 in New York previously. It fixed at $8.97.

On the board at NYMEX, January platinum was up 90 cents at $1,008 an ounce. Tuesday's high of $1,015 was the loftiest level since March 1980.

Spot platinum rose to $1,000/1,002.

March palladium jumped $11.85 or 4.1 percent to $300 an ounce. The day's peak was $300.50, which was another in a series of 19-month highs. Spot fetched $293/297.