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US gold up 5th straight day on dollar, geopolitics

Saturday, December 29, 2007

NEW YORK, Dec 28 (Reuters) - U.S. gold futures rose on
Friday, ending more than 1 percent higher as a weak dollar and
geopolitical tensions pushed prices toward key technical
levels, traders said.

Most-active gold futures for February GCG8 settled up
$10.90 at $842.70 an ounce on the COMEX metals division of the
New York Mercantile Exchange, moving between $828.30 and
$843.80, a new high since Nov. 26.

The contract has risen in five straight sessions from Dec.
20, gaining $39.50, or 5 percent.

Final gold volume on COMEX was estimated at 67,401 lots by
the close, not far from the 68,943 lots estimated for
Thursday.

Much of the momentum in the precious metal stemmed from
global security concerns after the assassination of Pakistan
opposition politician Benazir Bhutto, a key U.S. ally.

A fresh fall in the dollar after U.S. data showed a 9
percent decline in new home sales last month heightened concern
about the economy and sent investors after safe-haven assets.

"Again, the dollar is getting smoked, forcing some
short-covering in the (gold) market," said Neal Greenberg,
precious metals trader at RBC Proprietary Trading in Red Bank,
New Jersey.

Early in New York, the dollar was down 0.3 percent against
a basket of major currencies at 76.398 .DXY. It was down 1.7
percent on the week, on track for its worst weekly performance
since late November 2006.

"With the dollar under pressure and violent protests seen
in Pakistan, it is likely that gold could see further
safe-haven investment demand, and potentially rise to challenge
this year's high," said James Moore, a metals analyst at
TheBullionDesk.com.

February gold on COMEX touched a 28-year high of $855 an
ounce on Nov. 7. It then retreated to a three-week low of
$780.40 on Nov. 20 before a few volatile turns brought it above
$840.

"I think if it breaks out past $847, convincingly, you're
going to see a straight beeline toward $887." said RBC's
Greenberg.

In the physical bullion market, the price of spot gold
climbed as high as $839.80 an ounce, its highest since
Nov. 26. By 3:30 p.m. EST (2030 GMT), it was trading at
$837.80/838.50 per ounce, against a late Thursday quote of
$824.70/825.50 in New York.

COMEX silver for March delivery SIH8 firmed on the back
of the advance in gold, trading up 7.70 cents to $14.895 an
ounce. Spot silver was at $14.72/14.77 an ounce,
compared with the late Thursday quote of $14.58/$14.63 in New
York.

COMEX platinum for January PLF8 was up 1.70 to $1,540.50
an ounce.Spot platinum was quoted at $1,534/$1,538,
against Thursday's $1,535/$1,536.

Platinum prices have rallied nearly 40 percent on the year
amid a tight physical market due to lower output from top
producer South Africa.

COMEX palladium for March PAH8 also $1.70 to $370.05 an
ounce. Spot palladium fetched $363/366.
(Reporting by Barani Krishnan and Chris Kelly)

Posted by MOHAMED SAID at 3:39 PM  

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