Daily Gold Update

Source: Marketwatch

San Francisco— Concerns about Iran's nuclear brinkmanship with western governments and the United Nations Security Council pushed gold futures to fresh 25-year highs Monday, sparking a rally across the metals sector.

Gold for June delivery was up $15.30 at $615.40 an ounce on the New York Mercantile Exchange, after earlier rising to as high as $616.40, a 2.7% advance.

Silver followed suit, rising 37.5 cents at $13.23 an ounce, after touching a 22-year high of $13.33 an ounce in pre-market electronic trading.

"Heightened geopolitical tensions, a topping U.S. dollar and short positions that are being annihilated, all are combining to cause near parabolic rises across the metals complex," said Peter Grandich, editor of The Grandich Letter. "Sheer momentum is likely to carry it in the very near term, but a significant intermediate correction lurks down the road a bit."

Iran's insisting it will push ahead with its uranium-enrichment program, refusing to bow to the demands of the U.S. and European governments.

Ali Larijani, the nation's top nuclear official, said over the weekend that demands to halt the program were "irrational," the BBC reported.

Mohammed El Baradei, head the International Atomic Energy Agency, failed to persuade the Tehran government to freeze its nuclear program during a visit there last week. The IAEA is the United Nations' nuclear watchdog.

Kevin Kerr, veteran trader and editor of Global Resources Trader, a newsletter published by MarketWatch, the publisher of this report, said traders need to be wary of any sudden pronouncement from Iran that it may capitulate to western demands, unlikely as that seems given its hardline stance.

"Gold has had a very strong move over the last two weeks based on this story and has reached my near-term target of 610," he said.

"The risk/reward at these levels is very risky and traders should implement solid risk-management skills and heed the 'danger thin ice' signs all around the metals pits right now," he said.

Still, Kerr remains bullish on the sector and is buying physical metal, mining equities and even futures and options on pullbacks for the long term.

Platinum was last trading up $20.80 at $1,119 an ounce and palladium was up $13 at $362.50 an ounce. Copper rose 8.85 cents to $2.904 a pound, after earlier striking a record $2.935 a pound.

On the supply side, copper inventories were down 199 short tons at 17,920 short tons as of late Thursday, according Nymex data.

Gold supplies rose by 49,841 troy ounces to 7.62 million troy ounces, with silver supplies up 8,356 troy ounces at 124.7 million troy ounces.

Indexes tracking gold and silver mining stocks were also sharply higher to start the week.

The Amex Gold Bugs was up 3.1% at 359.62, the CBOE Gold Index rose 3.3% to 151.28 and the Philadelphia Gold and Silver Index added 3.3% to 150.31.