Gold hits 7-week high on tensions, record oil
Fri Jul 14, 2006 12:33 PM GMT
By Atul Prakash
LONDON (Reuters) - Gold climbed to a seven-week
high on Friday, powered by record oil prices and tensions across
the Middle East, but surrendered half of the gains to
profit-taking in later trade.
Dealers said price dips would attract buyers, which in turn
would arrest any sharp drop in prices.
"It's a combination of things that're keeping people a bit
nervous and keeping gold perhaps little bit more buoyant than we
would expect," said Tony Dobra, a director at Standard Chartered
Bank in London.
"Oil is up on political tension and so is gold. We saw
yesterday a fall in the equities markets as well. Hopefully
things are going to calm down in the Middle East," he said.
Spot gold jumped as high as $665.75 an ounce in Asian
trade before falling to $660.80/661.80 by 0957 GMT, against
$654.70/656.20 in New York late on Thursday.
Oil surged to record highs above $78 a barrel on fresh
supply fears in the world's eighth-largest oil exporter,
Nigeria, and political tension in the Middle East.
Israel struck Beirut airport again on Friday and bombed
Lebanese roads, power supplies and communication networks in a
widening campaign after Hizbollah guerrillas seized two Israeli
soldiers and killed eight.
Gold is often bought as a hedge against inflation and for
future sales in times of trouble. It hit a 26-year high of $730
an ounce in mid-May.
"With prices now holding firmly above $650, gold should see
further gains," Standard Bank said in a report.
SAFE-HAVEN BUYING
Gold began its climb this week after a series of bombs hit
railway carriages in India's financial hub Mumbai on Tuesday,
killing about 180 people. Safe-haven buying also resurfaced
after North Korea's missile test launches raised tensions.
"Dips continue to find support from bargain hunters," said
James Moore, precious metals analyst at TheBullionDesk.com.
"With no sign of a let up in geopolitical tensions and oil
prices potentially looking to test $80 a barrel, there is now
scope for gold to test $680," he said.
The dollar was marginally up against the euro.
Investors awaited the release of U.S. retail sales data for
June and the University of Michigan's consumer sentiment index
for July, due later in the day, for clues about the outlook for
U.S. rates and the dollar.
In other precious metals, platinum eased to
$1,246/1,252 an ounce from $1,249/1,255 in New York, while
palladium rose to $328/333 an ounce from $327/332.
Silver inched up to $11.67/11.77 an ounce from
$11.52/11.62 in the U.S. market.
