Choose a different title name

[ThatHawaiiGuy]

Gold I said: Gold Rises on Speculation of Increased Demand as Stocks Fall

Sept. 9 (Bloomberg) -- Gold futures in New York rose close to a seven-year high, topping $383 an ounce, on speculation of increased demand from investors seeking an alternative to the stock market.

Gold has risen 10 percent this year, benefiting from lower stock prices and a drop in the dollar, which makes the precious metal cheaper for buyers using euros and yen. The Standard & Poor's 500 stock index fell 0.8 percent, the second decline in three sessions.

``People are a little skeptical about stocks after the rally we've seen this year,'' said Michael Spano, an independent trader in New York who manages a portfolio that includes about $19 million in gold futures. ``People are taking gold for what it is, which is a safe investment.''

Gold for December delivery rose $7.20, or 1.9 percent, to $383.40 an ounce at 10:33 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the highest for a most-active contract since November 1996.

The rally accelerated after prices rose above $379.90, the six-year closing high on Feb. 4, triggering buying by commodity funds that use historical price patterns to make investment decisions, said Carlos Perez-Santalla, president of Hudson River Futures in New York.

Gold may reach $400 within the next month, Spano said.

The euro advanced 0.4 percent against the dollar, while the yen was 0.3 percent higher, making dollar-priced gold cheaper for buyers using those currencies.

Commodity Rally

Commodities from copper to cotton have gained this year as investors anticipated a recovery in the world economy will spur demand for raw materials. Gold is often seen by investors as a haven from accelerating inflation that can accompany economic growth.

``There is a new constituency of buyers, funds and investors in the New York market who haven't been seen before,'' said Kelvin Williams, marketing director at Johannesburg-based AngloGold Ltd., the world's second-biggest gold producer. It's a ``view by them on the economy. It's not only gold. It's platinum, zinc, nickel -- the buying has been across a broad spread of commodities and particularly enthusiastically into gold.''

Some speculators have been buying commodities such as gold, platinum and nickel on expectations that they will benefit from increasing demand in an economic recovery.

Hedge funds and other speculators raised their gold holdings to 122,847 contracts in the week ended Sept. 2 from 100,227 contracts the previous week. That's their largest number of contracts since at least February 1983.

Mining Stocks Rally

The Philadelphia Gold and Silver Index, which tracks the shares of 12 mining companies, rose 2.73, or 2.9 percent, to 96.09. Denver-based Newmont Mining Corp., the world's largest gold producer, rose $1.27 to $40.17, after touching $40.41, the highest price since October 1997.

Contributing to gold's gains were legal proceedings in which a rare-coin deal alleged bullion prices were being held artificially low, Perez-Santalla said.

Barrick Gold Corp. and J.P. Morgan Chase & Co. will face a U.S. trial over allegations by rare coin dealer Blanchard & Co. that they manipulated the price of gold. Judge Helen Berrigan of the Eastern District of Louisiana denied a request by Barrick, the world's third-largest gold producer, and J.P. Morgan, the second-largest U.S. bank by assets, for a summary judgment in the case, Blanchard said in a statement on Business Wire.

Last Updated: September 9, 2003 10:48 EDT


http://quote.bloomberg.com/apps/news?pid=10000087&sid=acXU_rKgQm9k&refer=top_world_news