Source: Marketwatch
San Francisco— Gold futures remained at lofty levels Wednesday afternoon after stretching to yet another multidecade high of almost $707 an ounce in electronic trading, and platinum and copper set records as dollar weakness and fund demand continued to support the rally in metals.
Gold for June delivery was last up $3.50 at $705 on the New York Mercantile Exchange, having earlier risen to as high as $706.80 in the electronic trading session. The contract reached an intraday high of $704.50. Futures prices haven't traded at levels this high since October 1980.
The gains came "quietly, but with conviction," according to Jon Nadler, investment products analyst at Kitco.com, capping a one-month performance that has propelled gold upward about $115 an ounce.
"The gold market has now become a huge powerhouse that is not only visible on every financial radar screen, but one that is regaining the respect it has always deserved," he said.
Gold is no longer just an inflation hedge, or a refuge from a weakening dollar, but rather the choice investment for a widening group of investors seeking better returns than are available in other asset classes.
"Whether we get a 1980s-style stampede to carry us to $850 (which by the way, is not a very special level, other than a pure numbers match for the January 1980 highs) and beyond depends on just how many additional individuals and institutions decide that gold is the place to be given what is happening in financial markets and global politics," Nadler added.
Gold is no longer just an inflation hedge, or a refuge from a weakening dollar, but rather the choice investment for a widening group of investors seeking better returns than are available in other asset classes.
The market is now awaiting today's Federal Reserve meeting, at which it is expected to raise rates by another quarter-percentage point — its 16th consecutive hike. The announcement is expected at 2:15 p.m. Eastern time, after the metals-futures market closes for the day.
With the rate move fully discounted by markets, all attention will be on the accompanying statement for any clues to the central bank's views on inflation and any sign of what it may do at its June meeting and beyond.
"We may well meander around these levels and possibly revisit the sub-$700 area during the course of the day," said Nadler, who concedes that some sort of correction to allow traders to lock in gains is overdue.
"Volatility will be very much in the ring."
Indeed, "it does not appear the gold and silver markets will be taking a summer vacation," said Peter Spina, a chief investment strategist at GoldSeek.com.
Overall, "few people want to sell as has been the case for a couple of hundred dollars," agreed Julian Phillips, an analyst at GoldForecaster.com. "The little man is not in this market at all.
"Don't expect a major correction, but do expect corrections or consolidations prior to new highs," he warned. "Both gold and silver are headed higher — much higher."
For now, July silver futures traded at $14.29 an ounce, down 17.5 cents, or 1.2%. But that's after climbing 5% to a 23-year high in the previous session.
New heights for copper, platinum
Copper futures struck a record at $3.704 a pound Wednesday. In London, the contract topped $8,000 a ton for the first time in its history, propelled higher by a weaker dollar, speculation of Chinese buying and the closure of a Mexican mine.
On Nymex, July copper was last up 9.4 cents, or 2.6%, at $3.69 per pound.
Optimism about the metal "has been boosted by unprecedented investment demand for copper, which according to Bloomsbury Minerals has now reached 465,000 [metric tons] — roughly three times the current level of stock carried on the LME (London Metals Exchange)," said John Clemmow, analyst at Investec Securities.
Adding to support for copper, mining company Grupo Mexico announced the closure Wednesday of its San Martin copper and zinc mine in northern Mexico because of an ongoing strike, according to news reports.
Platinum also set a record, with its July contract touching $1,268.50 an ounce overnight and $1,259.80 intraday — breaking Tuesday's intraday record of $1,243. The contract was last up $17.70 at $1,257.
June palladium was down $4.90 at $390 an ounce after reaching a four-year high of $395 on Tuesday.
On the supply side, gold inventories were unchanged at 7.63 million troy ounces as of late Tuesday, according to Nymex data. Silver supplies fell 589,633 troy ounces to 123.6 million.
Copper supplies fell 311 short tons to 14,565 short tons.
In the equities, three major benchmarks that track the sector were only modestly higher, but managed to touch fresh record highs.
The Philadelphia Gold and Silver Index rose 0.1% to 167.59 following a 168.50 peak and the CBOE Gold Index reached 171.26, up 0.2% after touching 172.01.
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