Gold futures in New York hit a 16-year high on a closing basis on Monday as investors bought the safe-haven metal due to an ailing dollar, soaring oil prices and uncertainty over the US presidential election, dealers said.
At the Comex division of the New York Mercantile Exchange, gold for December delivery rose $4.30 to settle at $429.90 an ounce the highest close price for a most-actively traded contract month since December 1988 after trading in a session range of $426.60 to $432.
Comex benchmark gold last settled this high on December 2, 1988, when it ended at $431.70 an ounce, a Nymex spokeswoman said.
Reface analyst Tom Boustead said gold futures needed to break above stiff resistance at the $433 an ounce area in order to extend the rally, while the market's first major support level would be down at around $423.
The dollar dipped near record lows against the euro on Monday, knocked by oil holding near its all-time high above $55 a barrel and fears about the US current account deficit.
Gold benefited under the circumstances as the hard asset is seen as a classic hedge against the dollar and, in relation to oil, as a hedge against inflation.
Nervousness ahead of the US election on November 2 also added to the dollar's worries and helped lift gold, dealers said. "We're completely in the hands of the currencies," said a broker at a futures commission merchant.
At Midafternoon, the euro had climbed to $1.2804, but it was still off from the February 18 record high of $1.2927. "We are looking at a target of $430 at this moment in spot gold and maybe then $450, if we follow what the rest of the world is saying," said Frank Abrupt at F.C. Stone in New York.
Large fund-type accounts extended their massive net long position in New York gold futures in the latest week. Analysts were concerned that the glut of longs was getting burdensome to the market and could lead to a sell-off.
Commitments of Traders data from the Commodity Futures Trading Commission issued on Friday showed the net speculative long exposure rose 5,777 lots to 120,914 lots as of October 19.
The net long position is the fifth highest ever, said Tim Evans, senior commodity analyst at IFR Markets.
"There is potential for further buying up to the 144,253 contract extreme from April 6, or for an even larger position, depending on the market's ability to either attract new players or for existing players to pyramid to an even larger position size," he said.
"However, the flow in does not look all that robust here, and there is also risk of long liquidation, especially if crude oil and the dollar reverse course." Evans pegged resistance, basis Comex December, at $432 and then at April's 15-year high at $436.50, with support at $423-421, $416.10 and then at the October 13 low at $410.50.
Spot gold was worth $428.25/9.00 an ounce, up sharply from Friday's New York closing level of $423.95/4.70. On Monday's afternoon London fix was at $429.15. As gold rose, Comex December silver climbed 4.7 cents to $7.38 an ounce, in a session range of $7.35 to $7.53.
Evans pinpointed key resistance at the $7.80-$8.00 area, while support was viewed down at $7.15 and then at $6.91. Spot silver priced at $7.33/36, above the previous close around $7.28/31. It fixed on Monday at $7.44.
January platinum went up $8.10 to $853 an ounce. Spot platinum edged to $846.50/851.50.
December palladium rose $3 to $218.95 an ounce. Spot palladium was at $214.00/220.00.
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