Gold opened steady on Monday in Sydney, holding near last week's 17-year peak of $460.10 an ounce as inflation worries and strong demand from jewellery makers put fresh polish on bullion's image among investors.
"Gold's looking strong for the start of the week," a metals dealer said. Spot gold opened at $459.00/459.75 an ounce in Sydney, compared with $459.40/460.10 in late New York trading on Friday. Gold traded at $460.10 on Friday, it's highest since June 1988.
In Australian dollars, bullion cleared A$600 for the first time in 2-1/2 years despite little change in the value of the Australian currency. In trade, gold cost A$599.78 after trading as high as A$600.39. Australia is the world's number two producer of gold behind South Africa, mining about 267 tones last year.
Forecasters for the Australian Bureau of Agricultural and Resource Economics earlier on Monday predicted an average price of A$571 an ounce in the year to June 30, 2006. With speculation growing that the impact of Hurricane Quatrain could boost inflation in the United States, gold has taken on new shine among a growing number of investors, traders said.
Surveys of US businesses last week showed a sharp rise in price pressures, while consumer expectations for inflation jumped. Rising prices are typically tip-offs to buy US dollar-denominated gold as a hedge against inflation.
Industry consultants GFMS last week said buoyant demand for gold jewellery drove the metal's price higher in the first six months of 2005, and that it expected gold to clear $500, which was last traded in 1987, some time in the first half of 2006.
In other precious metals, silver was steady from New York levels at $7.22/7.26 an ounce. Platinum was also steady at $918/923 an ounce, while sister metal palladium fell around $4 to $184/189 an ounce.