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NEW YORK (MarketWatch) -- Gold futures rallied nearly 3% in a broad-based advance for commodities Tuesday, as platinum surged more than 4% and hit another record high of $2,174 an ounce on persistent worries about supplies from the world's biggest producer South Africa.
Gold for April delivery soared $23.70, or nearly 3%, to end at $929.80 an ounce on the New York Mercantile Exchange. Other metals prices also made big gains.
"Gold is seeing a surge of interest as key technical and fundamental levels have been breached and a new wave of buying interest is pouring in," said Kevin Kerr, president of Kerrtrade.com and editor of Dow Jones MarketWatch's Global Resources Trader.
"This [is] after all the bearish talk of IMF liquidating gold holdings failed to push the metals significantly lower," Kerr said. Reports that the Group of Seven industrial nations approved the sale of gold by the International Monetary Fund put some pressure on prices last week. "A weaker dollar and fear of more interest-rate cuts yet to come are also boosting gold's allure," Kerr said. |
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"Gold is seeing a surge of interest as key technical and fundamental levels have been breached and a new wave of buying interest is pouring in."
— Kevin Kerr, president of Kerrtrade.com |
The dollar began the holiday-shortened U.S. trading week under pressure. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, dropped 0.4% to 75.945. See Currencies
Gold "was assisted by news of fresh write-downs at Swiss bank Credit Suisse, and by a surge in crude oil," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note.
Crude-oil futures surged nearly 5% Tuesday, soaring briefly above the $100 a barrel mark, boosted by concerns that the Organization of Petroleum Exporting Countries may cut oil production. The benchmark gasoline contract rallied 4% to a historic high on news that a Texas refinery was shut down Monday.
Five factors will drive gold prices higher -- supply and demand, dollar weakness, institutional buying, the price relationship between gold and oil, and global economic uncertainty, Donald W. Doyle, Jr. chairman and CEO of Blanchard and Company Inc., said in a statement Tuesday. Blanchard is a retailer of American rare coins and precious metals.
"The U.S. economy is slowing to a crawl, and the Fed is continuing to infuse liquidity through rate cuts that further weaken the dollar," Doyle said. "Look for large institutions and central banks to continue to move out of dollar-based assets and into quality alternative tangible assets such as gold." |
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April platinum rallied $89.40, or more than 4%, to end at $2,153.10 an ounce. Earlier in electronic trading, the contract hit a new record high of $2,174.0 an ounce.
Platinum prices have broken record after record in recent days, propelled by concerns about declining output from South Africa. The world's biggest platinum producer, South Africa has been gripped by severe power shortages since mid-January, forcing many major mining companies to operate below capacity and revise their production forecasts accordingly.
"Again, the recent surges have pushed the metal deeper into overbought territory," said James Moore, an analyst at TheBullionDesk.com, in a note.
However, he said that "with no end in sight to the supply woes it seems the only way is up, with any dips being viewed as buying opportunities."
Palladium surges nearly 10%
Also on Nymex, March palladium rallied $47.60, or over 10%, to finish at $499.30 an ounce. Earlier, the palladium contract hit an intraday high of $502 an ounce, its strongest level since July 2001, according to Dow Jones Newswires.
"The metal has risen on both investment and technical buying, and could look to challenge $500," Moore said.
March copper soared 20.05 cents, or 6%, at $3.7235 a pound and March silver rose 39 cents, or more than 2%, at $17.508 an ounce.
Gold warehouse inventories declined by 32,603 troy ounces to 7.6 million troy ounces as of late Friday, according to Nymex data. Silver stockpiles were unchanged at 133.9 million troy ounces, while copper supplies were unchanged at 13,978 short tons.
Polya Lesova is a MarketWatch reporter based in New York. |
