Gold climbs above $900/oz, rate decisions awaited
Arizona Coin Collector
http://www.reuters.com/article/hotStocksNews/idUSTRE5136KP20090204
Gold climbs above $900/oz, rate decisions awaited
Wed Feb 4, 2009 3:31pm EST
By Frank Tang and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold climbed above $900
an ounce Wednesday on economic worries amid a
global financial crisis as the bullion market
awaited direction from a raft of financial news
due later in the week.
"People are worried about the inflationary actions
that the central banks are taking to restore
liquidity and get the economy moving again. They
are dumping these paper currencies and heading for
anything that they can find is safe," said Tom
Dyson, editor at DailyWealth.com.
Spot gold was at $903.35 an ounce at 2:24 p.m. ET,
up 0.3 percent from the last trade $900.40 an
ounce in New York late on Tuesday.
U.S. gold futures for April delivery settled up
$9.70, or 1.1 percent, at $902.20 an ounce on the
COMEX division of the New York Mercantile Exchange.
For gold, risk aversion is likely to provide
significant support for the precious metal.
"Gold is a natural place for people to turn to in
these times, when assets such as mortgage backed
securities, that were regarded as ultra-safe 18
months ago, have turned out to be anything but,"
said Evy Hambro, manager of BlackRock's World
Gold and World Mining funds.
Demand for gold as a safe store of value has
surged recently as other assets have become
increasingly volatile. Physical bullion in the
form of coins and bars and gold-backed exchange >>
traded funds have proved popular with investors.
The world's largest gold-backed ETF, the SPDR
Gold Trust GLD.N, said its holdings held at a
record 853.37 metric tons on Tuesday, up more
than 9 percent from Jan 2.
The market is awaiting interest rates
announcements from European central banks on
Thursday and key U.S. jobs data on Friday for
new direction, but remains supported by demand
for gold as a safe store of value, analysts
said.
Dresdner Kleinwort consultant Peter Fertig said
while the ECB is unlikely to cut rates, comments
made at the press conference after its
rate-setting meeting "could surprise."
He added U.S. non-farm payrolls reports normally
lead to increased volatility in the foreign
exchange markets, and could have a significant
impact on gold.
The dollar was higher versus the euro but declines
in the European currency began earlier with news
of a downgrade in Russian sovereign debt. <USD/>
Gold is likely to remain relatively rangebound
until there is fresh news, with the precious
metal's failure to break above $930 an ounce last
week dampening some enthusiasm, traders said.
WEAK JEWELRY BUYING
However, demand for gold jewelry in traditionally
key global centers such as India and the Middle
East has been soft. Traders said gold buying in
India, the world's biggest gold market, was slack.
Turkey also stopped importing gold bullion in
January, as increasing levels of gold scrap coming
back onto the market were enough to meet domestic
demand.
Elsewhere, Swiss bank UBS (UBSN.VX) lifted its
2009 average gold price forecast to $1,000 an
ounce from a previous price view of $700, citing
expected strong safe-haven demand.
It said it sees investment demand for the precious
metal doubling in 2009 compared with 2007.
Among other precious metals, silver quoted at
$12.51 an ounce, up 0.9 percent from its previous
close of $12.40.
However, investment demand for silver remained
strong. Holdings of the iShares Silver Trust
SLV.A, the world's largest silver-backed ETF,
rose another 77 tons to a record on Feb 3.
Platinum was at $963.50 an ounce, up 0.4 percent
from its last finish $959.50, while palladium was
at $194.00 an ounce, up 1.3 percent from its
previous close $191.50on Tuesday.
(Editing by Christian Wiessner)
.