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Fly Me To The Moon: Gold & Platinum Prices on Steroids!
Gold for immediate delivery reached a 26-year high as investors bought the metal as a hedge against inflation after the U.S. Federal Reserve signaled concern about rising prices. Platinum rose to a record.
The Federal Reserve yesterday raised interest rates and said higher energy prices and raw material consumption ``have the potential to add to inflation pressures.'' Bullion for immediate delivery has jumped 37 percent this year on inflation and rising tension over Iran's nuclear program.
``Comments by the Fed which hinted at possible further rate rises signaled to the market that inflation concerns are still present,'' Tsuyoshi Furukawa, a commodity strategist at Taiheiyo Bussan Co. in Tokyo, said by phone today. ``Investors decided they'd have to buy gold as an inflation hedge.''
Gold for immediate delivery rose as much as $5.60, or 0.8 percent, to $713.50 an ounce, the highest since it traded at $717 on January 24, 1980. It traded at $711.83 at 4:20 p.m. Tokyo time.
Platinum rose to a record for a fourth day. There's speculation Johnson Matthey Plc., the world's largest distributor of platinum-group metals, ``will produce a bullish report on the market next week,'' according to an e-mail report from N.M. Rothschild & Sons (Australia) Ltd. today.
Platinum for immediate delivery rose as much as $21, or 1.7 percent, to $1,277.50 an ounce, having gained 44 percent in the past year. It traded at $1,271.50 an ounce at 4:21 p.m. in Tokyo.
Iran Tension
The U.S. government and other United Nations council members want Iran to stop its nuclear research, sparking concern supplies of oil from the world's fourth-largest oil producer may be disrupted. That led to record oil prices last month.
``Inflationary fears, geopolitical tensions regarding Iran, the pure weight of funds going into commodities'' are driving gold, said Darren Heathcote, head of trading at N.M. Rothschild & Sons (Australia) Ltd., in Sydney.
Fund investments in commodities may exceed $120 billion by 2008, up from $80 billion last year, according to Barclays Plc.
Goldman Sachs JBWere Pty raised its gold price estimates yesterday to $675 an ounce for 2006, from $575 an ounce, and expects gold to trade between $630 and $850 an ounce for the rest of the year.
Inflation erodes the value of assets such as bonds, and makes precious metals more attractive as hedges.
Supply Concern
Gold for June delivery on the Comex division of the New York Mercantile Exchange rose as much as $9.20, or 1.3 percent, to $714.90 an ounce in after-hours electronic trading, the highest since September 24, 1980, when the contract reached $716.00. The contract traded at $713.60 at 4:23 p.m. Tokyo time.
Some investors buy gold as inflation increases to preserve purchasing power. The precious metal surged to $873 an ounce in 1980, when consumer prices jumped more than 12 percent.
Gold production from the world's largest deposit, a mine run by Barrick Gold Corp., will be 50 percent lower than forecast this year because of damage to the main shaft, a partner in the project said yesterday.
``That may have some people worrying about supply going forward,'' said David Thurtell, a commodity strategist at Commonwealth Bank of Australia Ltd., said in Sydney. ``There's a lot reasons to buy gold now, and not much in the other way.''
