US gold futures stretched up to a new 23-year peak on Monday, as investors snapped up more of the precious metal due to inflation worries and amid increased diversification into commodities, dealers said.
With gold's rally as the main driver, all precious metals futures made new life-of-contract highs during the session on slipover fund buying from Asia and Europe. Silver hit another in a series of 18-year highs while platinum extended its gains above $1,000 an ounce.
Palladium rose to a 19-month high. At the New York Mercantile Exchange's Comex division, February delivery gold jumped $5.60 to finish at $512.60 an ounce, after trading from $506.80 to $512.90, which was the highest for a benchmark futures contract since February 1983.
At that time, the price peaked at $514 an ounce. The all-time high for futures, hit in January 1980, was near $870. Traders and analysts are largely bullish on gold's outlook as it once again forged new highs.
Inflation fears have played a key role in gold's rise, especially over the last year, they said, though robust investment and jewellery demand and a stable level of global mine production also have been supportive.
"The trend is clearly up; the fundamentals and technical are good," said Scott Myers, senior technical analyst at Pioneer Futures in New York. "I think we are looking at $515-$520 in the next two weeks."
Dealers said gold had plenty of room to rise into next year, but some concerns were arising about the potential for fund liquidation due to the big speculative long position. The fund net long exposure eased in the latest weekly Commitments of Traders data from the Commodity Futures Trading Commission. The report showed the net speculative long position in Comex gold eased to 158,905 contracts on November 29, from 162,982 lots on November 22.
Comex gold volume was light ahead of the close, with an estimated 37,000 contracts traded by 1 pm. Open interest fell 6,125 lots to 335,165 lots on December 2. Spot gold at last check was quoted at $508.40/509.20 an ounce compared with $503.00/3.80 at Friday's New York close.
On Monday's afternoon fix in London by bullion dealers was at $505.65. "Further pockets of profit taking are expected in the coming sessions but overall the tone remains bullish, with gold looking set to extend its gains in the coming week(s) as investors and speculators look to broaden their portfolios," said analysts at TheBullionDesk.com.
Speculative buying also dominated trading in the other metals. As a precious metal with industrial uses, silver got a lift from gains in both gold and copper, dealers said. Comex March silver rose 8.8 cents to end at $8.735 an ounce, after trading from $8.63 to $8.745, which marked futures' loftiest level since August 1987.
CFTC data showed the fund long exposure increased to 63,151 contracts by last on Tuesday, from 60,560 lots the week before. A move above $8.90 would take silver futures to there highest since May of that year, when they hit $9.50. Spot silver last was quoted at $8.63/65 an ounce from $8.54/56 late on Friday. On Monday's fix was at $8.59. On the board at Nymex, January platinum fell $3.60 to $1,004.30 an ounce. It hit $1,014 its best price since March 1980.
Spot platinum traded at $999/1,003. "There's some fund buying out of Europe going on in both platinum and palladium," said Ralph despotises at RJ Futures in New York. "I think commission houses are net sellers here, but I do see room for more gains in the PGMs."
March palladium rose $5.90 to $278.50 an ounce. The session peak of $278.70 was a 19-month high. Spot palladium was at $270/274.