Gold gains on Iran fears
E-mail | Print | | Disable live quotes By Ciara Linnane, MarketWatch
Last Update: 8:36 AM ET Apr 12, 2006
NEW YORK (MarketWatch) -- Gold futures edged higher early Wednesday, after Iran pledged to push ahead with industrial-scale uranium enrichment, provoking criticism from the United States, European Union and Russia.
Gold for June delivery was last trading up $1.60 cents at $601 an ounce on the New York Mercantile Exchange. The contract tapped a 25-year high of $608.40 an ounce on Tuesday before closing lower, reflecting caution about its lofty level.
The U.S. said Iran is "moving in the wrong direction" with its nuclear program after the Tehran government announced that it has successfully enriched uranium at one of its facilities.
President Mahmoud Ahmadinejad said the country has become a nuclear power and will push ahead with large-scale enrichment. He reiterated that Iran is aiming to generate power for peaceful, civilian use and is not planning to develop nuclear weapons.
Russia's foreign ministry criticized Iran and urged it to cease enriching uranium.
Mohammed El Baradei, head of the International Atomic Energy Agency, is expected to arrive in Iran this week to hold talks on its nuclear program.
Meanwhile, independent precious metals research group GFMS said developments across the Middle East are one factor that may help gold post further strong gains in the next two years -- and even surpass the 1980 high of $850 an ounce.
In its Gold Survey 2006, GFMS said it expects the metal to find support in a slowing U.S. economy, weaker dollar and inflationary pressures.
But after its gains of the past year, the metal has also become an attractive investment target for institutional investors, making it an asset class in its own right as well as an inflation hedge.
GFMS believes this phenomenon is still at its early stages but would not be surprised to see longer-term investors like pension funds enter the commodities market, propelling gold prices even higher.
"You're playing with fire if you ignore the weight of money argument, looking ahead into 2006," said Klapwijk.
"We'd only need to see a tiny slice of mainstream assets diverted into gold, which comparatively is a pretty small market, and the price could really take off." See full story.
Silver futures were last trading up 7 cents at $12.67 an ounce. Platinum was up $2.40 at $1,097 an ounce and palladium was down 80 cents at $345.20 an ounce.
Copper was up 1.85 cents at $2.74 a pound.
On the supply side, copper inventories were down 455 short tons at 18,565 short tons as of late Tuesday, according to Nymex data.
Gold supplies were unchanged at 7.57 million troy ounces and silver inventories were up by 630,728 troy ounces to 124.7 million troy ounces.
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