Gold Tops $900 in N.Y. on Interest-Rate Outlook, Equity Rebound |
| Date Added: January 24, 2008 12:19:28 PM |
Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aMU2OzE0N9Q8&refer=home Gold Tops $900 in N.Y. on Interest-Rate Outlook, Equity Rebound By Pham-Duy Nguyen Jan. 24 (Bloomberg) -- Gold topped $900 an ounce for the first time in a week after global equities rallied on speculation the Federal Reserve will further reduce U.S. borrowing costs to avoid a recession. Interest-rate futures indicated an 80 percent chance the Fed will reduce its benchmark interest rate to 3 percent next week, compared with a 76 percent chance yesterday. The central bank earlier this week slashed the rate to 3.5 percent from 4.25 percent in an emergency move. European shares had the biggest gain since 2003 after U.S. stocks rebounded yesterday. ``The markets sense more stability,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``The Fed is going to drop rates again, and that's going to hurt the dollar and help gold.'' Gold futures for February delivery rose $22.30, or 2.5 percent, to $905.40 an ounce at 11:23 a.m. on the Comex division of the New York Mercantile Exchange. The price earlier soared as high as $911.10. Before today, gold gained 5.4 percent this month, reaching a record $916.10 on Jan. 15. Fed policy makers reduced borrowing costs 1 percentage point last year, sending the dollar to a record low against the euro. Gold rallied 31 percent in 2007, the most since 1979. The euro today rose as much as 0.7 percent to $1.4734. ``Clear expectations that the Fed will cut once again next week, and cut until some signs of stabilization emerge, continue to fuel the precious metal,'' said Jon Nadler, an analyst at Kitco Minerals & Metals Inc. in Montreal. China's Economy China reported its economy expanded more than 11 percent for the fourth straight quarter, easing concerns global economies may sag. The UBS Bloomberg Constant Maturity Commodity Index of 26 prices rebounded, led by copper. The measure tumbled 3.5 percent in the previous two days, the most since mid-August. ``You're seeing investors come back with more of a risk appetite,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. ``The dollar should keep on losing ground against the euro, so we should see another record in gold in the next two weeks, if not sooner.'' Still, higher prices may deter jewelers, the biggest buyers of the metal, GFMS Ltd., a London-based researcher, said last week in a report. A slowing economy might also dampen demand by shoppers. Fabrication Demand Jewelry demand accounted for 62 percent of purchases last year, and that may drop below 50 percent this year, sending the price to $800 by July, GFMS said. Demand from jewelers rose 5.5 percent in 2007 to 2,407 metric tons. ``A recession will hurt fabrication demand but will be more than made up for by investment demand,'' said Tom Winmill, president of the Midas Management Corp. in New York. Investment demand in the StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, reached a record 653 metric tons on Jan. 14. The fund began trading in November 2004. Silver futures for March delivery jumped 31 cents, or 1.9 percent, to $16.28 an ounce. Before today, the price gained 7 percent this month. Platinum futures rose close to a record after the metal for immediate delivery climbed to the highest ever. Futures for April delivery surged $29.40, or 1.9 percent, to $1,588.50 an ounce on the Nymex. The price earlier reached $1,596. The metal soared to a record $1,597.40 on Jan. 14. Spot Platinum Record Platinum for immediate delivery rose as much as 2.4 percent to $1,594.75, the highest ever. Palladium futures for March delivery climbed $2.80, or 0.8 percent, to $372.25 an ounce. Before today, the metal dropped 2.3 percent this month. Lonmin Plc, the world's third-biggest platinum producer, cut its sales target in the year ending Sept. 30 by 4.4 percent because of accidents and a strike in South Africa. Aquarius Platinum Ltd., which also mines in the country, said production in the second quarter ended Dec. 31 fell 2 percent. Platinum and palladium are used to make jewelry and pollution-control devices in cars. To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net . Last Updated: January 24, 2008 11:29 EST |