Gold, platinum hit records as dollar weakens, jitters linger
Thomson FinancialFriday January 25, 2008
Gold surged to a record above 920 usd per ounce as the dollar weakened overnight, oil prices rose, financial jitters lingered and as mine stoppages in key producer South Africa sparked supply concerns.
Higher stock markets in Asia and London after Wall Street made gains yesterday also boosted sentiment, even though in the longer term major worries over the global economy remain.
Bullion trades in the opposite direction to the US dollar as it is seen as an alternative asset and in line with oil prices because gold acts as an inflation hedge.
Wider financial concerns and worries the US is headed for recession, meanwhile, boosted gold's appeal as a safe store of value.
On the supply side, meanwhile, Africa's biggest producers AngloGold Ashanti (NYSE:AU) , Harmony and Gold Fields have stopped output because of a power shortage.
The companies halted underground operations on worries that power cuts could trap miners, after the national power utility Eskom said it could not guarantee to supply their operations.
'Gold looks set to extend higher in the coming sessions as investors seek further safe-haven protection. In addition following the recent period of consolidation/correction the metal is well placed technically to move higher with RSI at 67 suggesting a target around 955-960,' said TheBullionDesk.Com analyst James Moore.
Investors are also rushing to buy gold, which last year rose by around 30 pct, ahead of the US Federal Reserve's Jan 30 meeting. The central bank is expected to cut interest rates again after it made an emergency 75 basis-point intra-meeting cut earlier this week.
Such a move would likely weaken the dollar further and therefore boost gold buying. Also, some market players might see another rate cut as the Fed's recognition that such drastic measures are needed to calm the ailing US economy, which would also spark investment into gold as a safe store of value.
'We continue to see further upside for the yellow metal today, with equities on the rebound,' said Standard Bank analyst Walter De Wet. But, he warned that 'the risk could lie in the belief that the Fed would not cut rates as aggressively as initially thought at the end of the month.' Some players, who had tipped the Fed to cut by 75 basis points next week have scaled back those expectations and now reckon 50 basis points is more likely.
Thomson FinancialFriday January 25, 2008
Gold surged to a record above 920 usd per ounce as the dollar weakened overnight, oil prices rose, financial jitters lingered and as mine stoppages in key producer South Africa sparked supply concerns.
Higher stock markets in Asia and London after Wall Street made gains yesterday also boosted sentiment, even though in the longer term major worries over the global economy remain.
Bullion trades in the opposite direction to the US dollar as it is seen as an alternative asset and in line with oil prices because gold acts as an inflation hedge.
Wider financial concerns and worries the US is headed for recession, meanwhile, boosted gold's appeal as a safe store of value.
On the supply side, meanwhile, Africa's biggest producers AngloGold Ashanti (NYSE:AU) , Harmony and Gold Fields have stopped output because of a power shortage.
The companies halted underground operations on worries that power cuts could trap miners, after the national power utility Eskom said it could not guarantee to supply their operations.
'Gold looks set to extend higher in the coming sessions as investors seek further safe-haven protection. In addition following the recent period of consolidation/correction the metal is well placed technically to move higher with RSI at 67 suggesting a target around 955-960,' said TheBullionDesk.Com analyst James Moore.
Investors are also rushing to buy gold, which last year rose by around 30 pct, ahead of the US Federal Reserve's Jan 30 meeting. The central bank is expected to cut interest rates again after it made an emergency 75 basis-point intra-meeting cut earlier this week.
Such a move would likely weaken the dollar further and therefore boost gold buying. Also, some market players might see another rate cut as the Fed's recognition that such drastic measures are needed to calm the ailing US economy, which would also spark investment into gold as a safe store of value.
'We continue to see further upside for the yellow metal today, with equities on the rebound,' said Standard Bank analyst Walter De Wet. But, he warned that 'the risk could lie in the belief that the Fed would not cut rates as aggressively as initially thought at the end of the month.' Some players, who had tipped the Fed to cut by 75 basis points next week have scaled back those expectations and now reckon 50 basis points is more likely.
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