16 October 2007
Johannesburg — THE gold price hit a 28-year high yesterday, with the precious metal's appeal polished by a weak dollar, record-high oil prices and geopolitical tension.
At the same time, supply worries swept platinum to a record peak.
The oil price responded with the cost of a barrel of Brent crude reaching a record high of $82,23, while precious metals were swept along by buoyant sentiment in gold and platinum, with silver reaching its highest price since the end of April.
Bullion has gathered momentum as the US currency's recent falls to successive record lows against the euro made the dollar-priced metal cheaper for holders of other currencies and raised its profile as a portfolio diversifi-cation tool.
HSBC analyst James Steel said: "In the case of gold, it's overwhelmingly related to the dollar, which is right back on the defensive again.
"It's very hard for gold not to rally in a case where the dollar is broadly moving backwards."
Steel said, however, that volumes were light, and this may have increased volatility on the market.
Spot gold hit a 28-year high of $759,90/oz and was trading at $756,90/oz in afternoon trade yesterday, up from $748,40/ $749,10 quoted late in New York on Friday.
Firm crude oil prices highlighted gold's role as a hedge against oil-led inflation.
Brent crude oil for next month rose 11,9% to $82,09 a barrel in London. This is the type of oil that SA imports.
Bloomberg reports that in trade during the day Brent crude reached $82,23, the highest price since the contract was introduced in 1988.
Both oil and gold were also supported by rising tension between Turkey and Iraq, with Turkey's parliament expected to debate a request for authorisation for an incursion into northern Iraq to deal with separatist Kurdish militants.
Spot platinum hit a record $1428/oz yesterday, having also been set or "fixed" in London at $1426.
Speculative buying linked to worries over supply constraints in SA have pushed up prices and leasing, or lending, rates on platinum , with speculation that the market is set to turn in a deficit this year.
"Platinum continues to hold the most bullish forecast of the precious complex as already tight fundamentals could be made tighter still should South African mine workers strike," said TheBullionDesk.com. analyst James Moore. SA's biggest mining union said on Friday it was preparing a strike notice, which it hoped to submit to authorities this week to apply for a one-day protest against deaths and accidents at mines.
A national strike over mine safety, pending government approval, would be a first for the union.
Calyon analyst Michael Widmer said: "There is just not a glut of metal out there, and that is supporting prices along with a weaker dollar. Prices above $1400, I think, are sustainable,"
Copper gained 2,5% yesterday, shrugging off rising metal stocks and focusing on gains in other commodities, while lead equalled its record high.
"There is a lot of bullishness out there, and people still see some upside in markets like lead and copper," analyst Daniel Smith at Standard Chartered said.
SA's currency was also responding to international markets.
The rand weakened more than 1,2% against the dollar yesterday , giving up some of last week's strong gains that were triggered by an interest rate increase.
Meanwhile, the JSE fell for a second day, with SABMiller leading declines after the world's third-biggest brewer said sales growth slowed in the second quarter.
Anglo American, which accounts for almost 15% of the benchmark by weighting, advanced with metal prices.
The all share index fell 61,47 or, 0,2%, to 31164,38, as 75 stocks dropped, 58 gained and 27 were unchanged. With Reuters, Bloomberg and Renée Bonorchis
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