Gold within striking distance of record By Chris Flood
Published: December 31 2007 10:00 | Last updated: January 1 2008 13:47
Gold rose to within striking distance of its record high on the last trading day of 2007, helped by safe haven buying prompted by concerns about the deteriorating political situation in Pakistan following the assassination of Benazir Bhutto on Thursday.
Gold reached a session high of $843.20 a troy ounce on Monday, the highest level since January 1980, when bullion reached a record $850 during a period of intense geo-political tensions including the US hostage crisis in Iran and the Soviet Union’s invasion of Afghanistan.
Dealers said thin trading conditions were contributing to price volatility for precious metals and that there was a reluctance to go short (bet on price weakness) ahead of the New Year break as the situation in Pakistan was so unstable.
Officials in Pakistan have still to decide whether to go ahead with the election for president later this month as outbreaks of sporadic violence continued across the country.
Jude Brhanavan of Deutsche Bank pointed out that 2007 marked the sixth consecutive year of positive returns for gold so this represented the longest price rally for gold in history.
Gold ended trading in New York at $833.20 a troy ounce, down 0.6 per cent on the day but up by 30.9 per cent since the start of 2007.
Geo-political concerns also provided support for oil prices. On Sunday, Iran’s foreign minister said the country’s first atomic power plant would start operations by the middle of 2008, renewing concerns about Teheran’s nuclear ambitions.
On Monday, Nymex February West Texas Intermediate ended trading in New Yok at $96.20 a barrel, up 20 cents on the day while ICE February Brent slipped 3 cents lower to $94.02 a barrel.
Oil prices rose more than 57 per cent this year and WTI reached a record of $99.29 in November, within striking distance of the $100 level. Some traders feel a move above $100 is inevitable, given ongoing strength in demand from emerging markets and continued disappointments in non-Opec supplies.
The latest data on speculative positioning from the Commodity Futures Trading Commission showed that in the approach to Christmas, speculators increased net long positions (bets on further price gains) across the entire commodities complex with the exceptions of natural gas and palladium.
The net long position in crude oil jumped by 51.1 per cent to 52,847 lots in the week to December 24 when WTI reached $94.13 a barrel.
The speculative net long position on gold rose by 8.3 per cent to 184,375 lots while the net long on platinum increased 12.3 per cent.
Plpatinum prices appeared to be finishing the year on a strong note, trading at $1,520 a troy ounce, not far short of the record $1,542 reached last week. The platinum market remains extremely tight with disruptions to supplies being caused by fatalities in South Africa’s mning industry while demand has reached record levels supported by growing consumption in the autocatalyst sector.
