ODJ Market Special: Gold Hits 26-Mo Highs; Aiming At $330
-- Dollar Lower Again Vs Euro, Australian Dollar, Yen -- Speculative, Bank Buyers Behind Steady Push -- Initial Target Seen As $330, Then $340
By Gavin Maguire New York, May 29 (OsterDowJones) - Comex gold futures have scaled 26-month highs of $327.30 per ounce Wednesday. More bank buying and short covering as well as steady speculative buying continued to drive gold higher amid the current weak dollar environment. Jun climbed to its highest levels since March 2000 early following a firm performance by spot gold overnight and continued softness in the dollar. Dealers at large U.S. bullion houses say the $330 level is being targeted by some players as the next port of call over the near term, with the $340 area lurking beyond. Frederic Panizzutti, of online brokers GoldAvenue.com, argued that profit taking may be prompted at the $330 level, which may serve to slow upside momentum beyond that point. However, sources agree that sustained weakness in the dollar will continue to usher in further buyers. The dollar plumbed 8-month lows against the euro and 16-month lows against the Australian dollar on Wednesday morning to render dollar-denominated gold increasingly affordable to foreign-based buyers. This weakened dollar is set against a backdrop of steadily increasing tensions across the Middle East following suicide bombings in Israel and the escalation in tensions between India and Pakistan, adding the element of safe- haven gold buying. Further flight-to-safety buying has been prompted by the jittery U.S. equity markets of late. Equities have struggled to press higher under the questions hanging over the recuperative powers of the U.S. economy. Finally, joining these buyers has been a steady flow of momentum-based investors. They have been attracted by gold and the gold equity market sector's impressive rises since the beginning of the year, which have outperformed many if not all other sectors in the market. Dealers said that as the dollar is widely expected to remain under pressure and tensions in the Middle East do not look resolvable in the near term, gold is set to remain on its recent upward path for the foreseeable future. By 0910 ET Jun was quoted at $327.00-$327.20.
