Gold futures climb near $570 an ounce Gold underpinned by political worry; silver at 19-year high
By Myra P. Saefong, MarketWatch Last Update: 1:23 PM ET Jan. 30, 2006 Disable MW live quotes | E-mail it | Print | Discuss | Alert | Reprint | ?
SAN FRANCISCO (MarketWatch) -- The April contract for gold futures climbed to a more than one-week high near $570 an ounce Monday, with political tension in the Middle East providing support a day ahead of a widely expected hike in U.S. interest rates.
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Gold for April delivery was last up $5.80 at $569.50 an ounce on the New York Mercantile Exchange after trading as high as $569.80.
Prices for the contract rose to a high of $573.70 on Jan. 20. The lead-month contract that day was February gold, which climbed to $568.50, the highest front-month futures level since January 1981.
The metal is expected to continue to trade off political uncertainty, although volumes are lighter than normal with much of Asia closed for the Lunar New Year holiday.
"It is certainly possible that the gold market will see some fresh, flight-to-quality interest off the rising tensions in the Middle East," said Nell Sloane, an analyst at NSFutures.com in daily commentary.
Political uncertainty surrounds Iran's nuclear ambitions and the surprise victory of Hamas in last week's Palestinian elections -- creating safe-haven demand for the precious metal.
"But with the dollar also showing significant strength last week, it is possible that dollar strength ends up countervailing any flight-to-quality interest that might be seen in gold," Sloane said.
"There are also looming risk events, including [Tuesday's Federal Reserve policy-panel meeting], which have served to reduce impetus to trade," according to Action Economics.
The Fed is expected to raise its key interest-rate target by another 25 basis points to 4.5% on Tuesday, its 14th straight increase.
But for the first time since it starting boosting rates in June 2004, the central bank will pull the plug on the forward-looking language that has guided markets toward conclusions about future rate moves. It is likely to retreat to its old tradition of keeping markets guessing, economists said. See Economic Outlook.
Still, "the longer-term outlook for gold remains robust, given constrained output and soaring physical demand from the major emerging economies of India and China," added Action Economics.
On the supply side, copper inventories were up 1,700 short tons at 11,758 as of late Friday, according to the New York Mercantile Exchange.
Gold stocks were up 192 troy ounces at 7.32 million troy ounces, while silver supplies were up 598,139 troy ounces at 124.8 million.
Most other metals were higher in morning trading. March silver was last up 14.5 cents at $9.755 an ounce, after trading at a 19-year high $9.81. April platinum was up $6.80 at $1,079.50 an ounce after a 26-year high of $1,082, and sister metal March palladium was up $5.50 at $283.50 an ounce.
March copper was lower, trading last down 0.6 cent at $2.227 a pound.
Metals equities trade higher
In equities, shares of metals-mining companies traded mainly higher, lifting the Amex Gold Bugs Index to another record.
The Amex Gold Bugs Index (HUI: amex gold bugs index equal-$ weight News, chart, profile, more Last: 332.01+7.69+2.37%
2:41pm 01/30/2006 Add to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: HUI332.01, +7.69, +2.4%) tapped a record 330.06, and was last at 328.91, up 1.4% -- even after ending last week up 6.8%.
The CBOE Gold Index (GOX: CBOE Gold Index News, chart, profile, more Last: 141.27+2.34+1.68%
2:41pm 01/30/2006 Add to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: GOX141.27, +2.34, +1.7%) moved up 0.8% to trade at 140.08 points and the Philadelphia Gold and Silver Index (XAU: phlx gold silver index capital-weight News, chart, profile, more Last: 149.04+2.25+1.53%
2:41pm 01/30/2006 Add to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: XAU149.04, +2.25, +1.5%) rose 0.6% to 147.63.
Among the standouts, shares of Hecla Mining (HL: Hecla Mining Company News, chart, profile, more Last: 5.48+0.36+7.03%
2:20pm 01/30/2006 Add to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: HL5.48, +0.36, +7.0%) tacked on 4.3% to trade at $5.34 and Coeur d'Alene Mines (CDE: Coeur d'Alene Mines Corporation News, chart, profile, more Last: 5.12+0.25+5.13%
2:21pm 01/30/2006 Add to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: CDE5.12, +0.25, +5.1%) was up 2.7% at $5.
