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Gold soars to highest since May2006-07-12 16:05:04http://www.news24.com/Images/Photos/20060712160407gold_bars.jpgThe spot price of gold has climbed to $650.60/oz, its highest level since May, on stronger base metals, higher oil and bombings in India. Johannesburg - The spot price of gold on Wednesday climbed to its highest level since late May of US$650.50 a troy ounce on stronger base metals, higher oil prices and bombings in India, analysts and traders said.
At 15:00, gold was quoted at $649.95/oz, up $9.25/oz from the metal's previous close.

"Gold has been steady all day on fund buying. The funds are buying again with base metals rock steady and the market has an appetite for metals again. Next key resistance is between $660/oz and $665/oz and after that $695/oz to $700/oz," a London-based trader said.

Safe haven buying

"Strong base metals, slightly higher oil prices and perhaps some safe haven buying after news of the bombing in India all have been attributed as reasons for the move and while we are unsure of the exact reasons for the move higher, important resistance at $637/oz was broken and our technical analysts how see gold up towards $660/oz in the short term," London-based UBS analysts wrote.

The spot Brent crude oil price was last at $73.99 a barrel, up $0.32 from Tuesday's close.

"In the short term, it seems that metal prices may move higher still although we are unconvinced that this will be sustained for long," UBS added.

"Risk events to watch out for include the Fed chair's testimony to congress on July 19 and 20 and the release of US June consumer price inflation on July 19.

"It is possible that the Bank of Japan's monetary policy decision on Friday could rattle markets although even our own economists disagree about the importance of the yen carry trade to risk markets," UBS analysts wrote.

Mumbai bombings

The bombings in Mumbai had caused gold to break out of its sideways trade and break through resistance at $637/oz, Johannesburg-based trader for Absa Byron Woods said.

The death toll from a wave of coordinated blasts on commuter trains in India's financial capital Mumbai had risen to 183 with 624 people injured, according to latest police figures Wednesday, AFP reported.

"The injured were being treated at 31 different hospitals in the city and its suburbs, according to lists of casualties printed on the Mumbai police website," AFP added.

For the short term, gold was likely to trade sideways, but in the long run the metal could climb back to $700/oz, Woods said.

For the next six weeks, gold was likely to trade between $610/oz and $659/oz, which was a key technical level, he added.

Platinum was last quoted at $1,261/oz, up $19.50/oz from the metal's Tuesday close and the metal's highest level since the end of May, and palladium last traded at $328.50/oz, up $4.50/oz from the previous close.

Platinum and palladium have traded higher, but palladium appeared to be lagging the recovery in the other precious metals, perhaps in recognition that the fundamentals do not really support strong palladium prices, UBS said.

Finance24/I-Net Bridge (Business)