New York gold futures rose 1 percent on Monday on safe-haven buying after North Korea said it had carried out a threatened nuclear test, traders said. The news from Pyongyang of the underground detonation also contributed to a jump in US crude oil prices, burnishing gold as insurance against both inflation and geopolitical risk.
But trading was thin, with some bond markets closed for the US government Columbus Day holiday. "It was up overnight. I think this whole North Korean story is what pushed the market higher. Crude oil is a little stronger, copper is a little stronger and on the back of that gold and silver are a little better," said one gold trader.
At the COMEX division of the New York Mercantile Exchange, gold for December delivery settled $6 higher at $582.80 an ounce, trading in a range between $575.50 to $585.20.
Estimated COMEX volume was 15,000 contracts. Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 29,197 contracts as of 2:31 pm EDT (1831 GMT). (http://www.cbot.com/cbot/pub/page/0,3181,297,00.html). Gold was swept up in buying across the commodity markets.
NYMEX November crude was up 65 cents at $60.41 a barrel in late trade on expectations that Opec will cut 1 million barrels per day of production to halt falling prices. For crisis-sensitive commodities like oil and gold, that dovetailed with the global anxiety caused by North Korea's test. The White House condemned it as a "provocative act" and called for an immediate response from the UN Security Council.
Monday's announcement by Pyongyang sharply escalated world concerns over North Korea's nuclear program and was a slap in the face for major regional and world powers engaged in six-party talks intended to prevent just such a test. The Reuters/Jefferies CRB Index of 19 commodity futures was up 1.1 percent based on gains in energy, metals and agriculture markets.
"You had some safe-haven buying early," said James Quinn, commodities commentator at A.G. Edwards & Sons. "I think the outside influences all contributed to firmer (precious metals) - grains, the CRB, the dollar being no better than flat," Quinn said. Spot gold strengthened to $576.00/7.10 an ounce, up from $572.40/3.40 late Friday. London bullion dealers fixed Monday's afternoon spot reference price at $575.25 an ounce.
December silver rallied $24.50 to $11.42 an ounce, ranging from $11.16 to $11.55. Spot silver closed at $11.28/11.35, up from $11.08/11.15 late Friday in New York. The silver fix was $11.3350 an ounce. NYMEX January 2007 platinum gained $14.10 to settle at $1,094.90 an ounce. Spot platinum rose to $1,082/1,087 an ounce. December palladium went up $3 to $303.25 an ounce. Spot palladium closed at $300/304 per ounce.
Also on Monday, Norilsk Nickel, the world's largest nickel and palladium miner, raised its forecast for 2006 platinum and palladium output due to improved recovery of metal from its ores.
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