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Gold hits 7-month high above $970 on safety buying
Feb 17, 2009 05:02AM
NEW YORK (MarketWatch) -- Gold futures breached $970 an ounce Tuesday, rising to the highest level in seven months as investors bought the metal to seek safe haven against economic troubles.
Heightened risk aversion also pushed up the U.S. dollar and treasury securities, while oil futures and global stock markets slid. Safe-haven buying raised holdings in the largest gold exchange-traded fund to a new record high near 1,000 tons, according to latest data.
Gold for February delivery rose $28.80, or 3.1%, to $970.30 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest level for a front-month contract since July.
Monday's gain followed gold's 3% increase last week. The metal is now just about $35 below its record high above $1,003 an ounce set in March, 2008. The more active April contract also rose Tuesday, up 3% at $972.
"I think $1000 is pretty much almost in the cards here just given how strong the trend has been," said Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund.
The strong demand for gold is "a reflection of just how concerned investors are becoming about the ongoing volatility in the equity market as well as the financial crisis," he added.
GLD95.28, +2.73, +3.0%) , the largest gold exchange-traded fund, rose 1.6% from a day ago to 985.86 tons Friday, according to latest data. That's up more than 180 tons from a month ago.
Sending more gloomy news to investors Tuesday, retail giant Wal-Mart Stores Inc. said fourth-quarter profit fell 7.4%.
Meanwhile, stocks in Asia and Europe moved lower, with the banking sector sliding on concerns the global economic crisis is deepening. Futures trading in the U.S. also indicated a bearish session.
Credit-rating company Moody's Tuesday flagged concerns about Western European banks' exposure to Eastern European countries.
"Gold is moving as the last phase of the crisis appears to have started," said Martin Hennecke, an associate director with Tyche Group in Hong Kong.
Gold prices, which tend to move in opposite directions to the U.S. dollar, have moved in tandem with the greenback recently, as risk aversion lifted both the dollar and gold.
DXY87.65, +0.99, +1.1%) , which tracks the value of the greenback against its major rivals, rose 0.4% to 87.515. Of notable weakness was the Japanese currency, which slipped to the 92-yen level against the dollar. See Currencies.
In other metals trading, March copper fell 5.7% to $1.4505 a pound, while March silver rose 2.2% $13.92 an ounce. March palladium added 0.7% to $218 an ounce, and the April contract for sister metal platinum rose 2.8% to $1,091 an ounce.