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.
---
Gavin Maguire, OsterDowJones, (212) 668-0071
[email protected]
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