Gold futures surge 2% on rising oil, Iran tensions | |
| Date Added: July 12, 2008 02:53:50 AM | |
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NEW YORK (MarketWatch) -- Gold futures rallied Friday to their highest level since mid-March, as soaring oil prices, mounting tensions between Iran and the West and a sell-off on Wall Street prompted investors to seek a safe haven in the precious metal.
Gold for August delivery rallied $18.60 to end at $960.60 an ounce on the New York Mercantile Exchange.
Earlier, the contract hit an intraday high at $967.30 an ounce, its highest level since March 18 when gold rose as high as $1,012.60 an ounce.
Gold posted a weekly gain of $27, or 2.8%, from last Thursday's closing level of $933.60 an ounce.
"Safe-haven oriented gold buying was the theme, but the gain is clearly attributable to the turnaround in oil and the apparent imminence of an air strike against Iran," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note.
Iran said it test fired a number of missiles in recent days, including a missile that's capable of reaching Israel. Such reports, though questioned by some U.S. military officials, have resonated in Israel.
The Jerusalem Post, citing remarks by Iraqi defense ministry sources, reported that Israeli warplanes have practiced in Iraqi air space, adding to speculation about a potential strike on Iranian targets.
The report was also carried by Iranian news outlets, the newspaper said, and claimed that massive activity by Israeli planes conducted under cover of darkness was noted at several U.S. bases recently. The Jerusalem Post said it could not confirm the report.
Against this backdrop, crude oil for August delivery closed up $3.43, or 2.4%, at $145.08 on Friday on the New York Mercantile Exchange. It hit an all-time record of $147.27 a barrel in electronic trading in early morning trading. See Futures Movers.
"You have falling stocks, rising interest rates, rising oil prices," said Frank McGhee, precious metals trader at Chicago-based Integrated Brokerage Services.
"This type of rally is very clearly indicative of a very, very severe worry from the markets," he said.
On Wall Street, U.S. stocks sank, as Treasury Secretary Hank Paulson rejected the idea of an imminent bailout of mortgage buyers Fannie Mae and Freddie Mac. "The growing sense of concern over the stability of the financial system is starting to teeter on the edge of a panic," said Peter Spina, chief investment analyst at GoldSeek.com.
"The destruction of confidence will translate into greater flow of capital into both gold and silver," Spina said. "Confidence in gold and silver's monetary integrity is backed up by many attributes including history itself."
Dollar falls on geopolitics
In foreign-exchange trading, the dollar lost ground against other major currencies on rising geopolitical risk and renewed credit worries. The dollar index (DXY:
US Dollar Index Future - Spot Price
Last: 72.10-0.60-0.83%
5:43pm 07/11/2008  Delayed quote data Sponsored by:
For the dollar, "politics is trumping economics as fears that Israel may attack oil-rich Iran makes traders jittery," wrote Kathy Lien, chief strategist at DailyFX.com, in a note.
"This fear is also reflected in gold prices which are near a three-month high," Lien said. "Flight to safety is the market's top priority with geopolitical risks on the table."
On Thursday, gold surged $13.40 to end at $942 an ounce on Nymex.
"Given the mixture of worsening economic signals from the U.S. and Western Europe, rising inflationary pressures and renewed geopolitical tensions, we retain our bullish outlook," wrote James Moore, an analyst at TheBullionDesk.com, in a note.
Also on Nymex, September silver surged 50 cents to $18.82 an ounce.
October platinum rose $48.80 to end at $2,047.20 an ounce and September palladium added $5.80 to $457.80 an ounce.
September copper gained 2 cents to end at $3.74 a pound. Access the rest of the article using the link above. Polya Lesova is a MarketWatch reporter based in New York.
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