ATUL PRAKASH
Reuters News
December 27, 2007 at 11:01 AM EST
Gold hit a one-month high on Thursday with buying accelerating after news that Pakistani opposition leader Benazir Bhutto was killed in an attack.
Spot platinum set a historic peak, tracking gold prices with further support from positive fundamentals, traders said.
A weaker dollar after data showing lower-than-expected U.S. durable goods orders in November also supported precious metals.
Spot gold, often seen as a safe-haven asset, rose as high as $830.05 an ounce (U.S.), the highest since Nov. 26.
“Certainly it's going to work in gold's favour. Instability in Pakistan is favourable for the market,” said James Moore, precious metals analyst at TheBullionDesk.com. “The markets are very thin and people are jittery. Any such news is going to create a larger reaction than you would normally expect to see.”
Pakistani opposition leader Benazir Bhutto was assassinated on Thursday in a gun and bomb attack as she left an election rally in the city of Rawalpindi. Police said a suicide bomber fired shots at Bhutto as she was leaving the rally venue in a park before blowing himself up.
Simon Weeks, director of precious metals trading at Bank of Nova Scotia, said Bhutto's news helped the metal.
“U.S. numbers were dollar negative as well and the U.S. market has seen buying over the Christmas holidays. I would think that $825-$830 should be enough for now but headlines news items are all being interpreted as bullish at the moment.”
Trading volumes in the bullion market were thin as many players were away or keeping their positions light due to year-end holidays, but the outlook remained positive and analysts said they expected gold to advance in the new year.
Gold has gained more than 30 per cent this year.
“Everybody will just be a bit afraid to be short right now as oil is also higher. People would rather own gold at a time like this,” a European trader said.
“There looks to be some genuine buying,” he said, adding that 1-month implied volatility on gold had risen to over 20 per cent.
In other bullion markets, U.S. gold futures rose, with the most active February contract trading up $2.70 at $832.10 from the New York settlement.
Spot platinum rose to a record $1,542.00 an ounce and was last quoted at $1,539/1,543, the level it closed at in New York on Wednesday.
The metal has gained almost 40 per cent this year. “The overall fundamentals remain relatively bullish for platinum and there may be further gains ahead in the short-term, with fundamental supply concerns hanging over the market,” Standard Bank said in a report.
Supply disruptions at some mines in South Africa, the world's top producer, have resulted in a deficit this year and are likely to leave the market in a deficit again next year.
Aquarius Platinum said last week it lost an attributable 250 ounces of platinum group metals a day due to a strike at its Marikana mine in South Africa.
