Gold spikes to six-month peak in Europe, eyes new highs

09 Oct, 2004

Gold shot to its highest since early April on Friday afternoon in Europe as funds seized on a surging euro after weak US jobs data cast doubt on the pace of monetary tightening there, traders said.
With other commodities like base metals soaring, analysts said fresh investor cash could pump gold prices up to test new highs for this year beyond $430 per ounce.
Spot gold was at $422.65/423.40 by 1441 GMT after hitting a peak of $423.70 - the highest since early April, when prices came within 10 cents of January's 15-year peak at $430.50.
Gold was at $417.80/418.55 late in New York on Thursday.
"We've had a bid tone to gold all week - the market was looking for a catalyst to break through $420 and that was always going to be a weak jobs report," Barclays Capital analyst Kamal Naqvi told Reuters.
The euro jumped to top $1.2400 against the dollar after the US government reported that businesses added 96,000 jobs to payrolls in September, well below Wall Street economists' forecasts for 148,000 new jobs.
Traders said the weak data supported expectations that the Federal Reserve would pause this year in its drive to lift interest rates, which would hurt the dollar and add gloss to gold.
"The euro rose to $1.24 so gold went up as expected. People will now be looking at whether the euro continues to run higher," a dealer said.
"Given that we're seeing other metals and energy commodities at the very least testing their highs for this year, or multi-decade or multi-year highs, its logical that the next target for gold would be the highs for this year," Naqvi added.
Soaring base and precious metals prices and near record energy costs on Friday extended a rally in the benchmark Reuters CRB Index of 17 commodity futures further into levels last seen in early 1981.
Base metals were led by copper prices, which surged to their highest in nearly 16 years as a potential strike at a unit of the world's largest producer lured in fresh buying.
Platinum was firmer at $840.00/845.00 from $838.50/843.50 quoted late on Thursday in New York.
Support was still coming from labour unrest at the world's two biggest platinum producers Angloplat and Implats.
Angloplat said late on Thursday it was confident of a deal with unions to end a week-long dispute.
Also on Friday, independent research group Virtual metals said that platinum could push up to $1,000 an ounce over the next six to nine months as tight supply worsened.
Silver zipped up, encouraged by the gains in gold and base metals to $7.25/7.28 from $7.16/7.19, while palladium also firmed to $233.00/238.00 from $228.50/234.50.

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