Daily Gold Update

Source: Marketwatch.com

New York— Gold futures set a fresh 18-year high in early trade Monday, extending recent gains on continued strong physical demand, central bank buying and inflation concern.

Gold for December delivery was last trading up $2.60 at $488.80 an ounce, having earlier touched a high of $490.50 an ounce, its highest level since December 1987.

Peter Grandich, editor of The Grandich Letter, said that while the recent rise in gold prices has been driven by factors including increased investment demand, geopolitical uncertainty and the search for an alternative to paper currencies, "another factor has been in a stealth mode but never-the-less critical to the rise – major players caught short.

"I believe groups who have tried to artificially depress gold prices are in serious trouble and can cause a far greater rise than most assume today," said Grandich.

Gold futures added almost $17 an ounce last week with many analysts expecting the metal to surpass the $500 an ounce level before the end of the year and trade above that heading into 2006.

Silver futures added 1.80 cents to $8.085 an ounce. Platinum dipped $7.10 to $979 an ounce and its sister metal palladium rose up $2 at $269 an ounce.

Copper set a fresh record at $1.989 a pound, before pulling back 90 cents to $1.969 a pound.

Copper prices surged last week amid speculation China is being forced to buy large quantities of the metal to cover a position taken by a Chinese copper dealer in London, who subsequently disappeared.

The trader, Liu Qibing, reported to have taken short positions equal to 100,000-200,000 tons of copper, is now in police custody in Beijing, AFX News reported, citing China publication the Economic Observer.

The news agency also said that China's State Reserve Bureau (SRB) has been shipping copper reserves to Shanghai from around the country to prepare to cover the short position on the London Metals Exchange. Qibing's position is scheduled for delivery in December.

On the supply side, gold supplies stood at 6.52 million troy ounces as of late Friday, down from 6.62 million the previous day. Copper supplies were slightly lower at 3,690 short tons against 3,680 short tons and silver was unchanged at 116.4 million troy ounces.