25 Okt 2004 17:19
25.10.2004 17:09:36 NY gold hits 6-1/2-mo. high early, on oil, dollar
NEW YORK, Oct 25 (Reuters) - Gold futures shot to 6-1/2-month highs Monday morning as an ailing dollar plunged against its rivals, and the precious metal had plenty of room to stretch higher amid soaring oil prices, traders said.
At the COMEX division of the New York Mercantile Exchange, gold for December delivery jumped $4.10 to $429.70 an ounce at 10:29 a.m. EDT, trading from $426.60 to $432.
Gold was benefiting from its status as a classic safe-haven investment as the dollar flirted with a record low versus the euro while oil held strong near its record above $55 a barrel.
Rising crude oil prices and worries about the U.S. current account deficit were weighing heavily on the greenback, which boosted demand from overseas for precious metals because they are priced in dollars.
Oil itself rocketed higher as a threat by Norwegian oil employers to halt output from the world's third biggest exporter stoked supply fears.
"The rally in the gold is basically on the weakness in the dollar, the news out of Norway and the oil moving higher," Frank Aburto, a trader at F.C. Stone, said.
"We are looking at a target of $430 at this moment in spot gold and maybe then $450, if we follow what the rest of the world is saying."
At midmorning, the euro was up at $1.2778 , but still off from the Feb. 18 record high of $1.2927.
Meanwhile, big fund-type accounts extended the massive net speculative long position in New York gold futures in the latest week. Analysts were concerned that the glut of longs was getting burdensome to the market and could lead to a sell-off.
Closely watched Commitments of Traders data from the Commodity Futures Trading Commission issued after Friday's close showed the net fund long stance rose 5,777 lots to 120,914 lots as of Oct. 19.
The exposure is the fifth highest ever, said Tim Evans, senior commodity analyst at IFR Markets.
"There is potential for further buying up to the 144,253 contract extreme from April 6, or for an even larger position, depending on the market's ability to either attract new players or for existing players to pyramid to an even larger position size," he added.
"However, the flow in does not look all that robust here, and there is also risk of long liquidation, especially if crude oil and the dollar reverse course."
Evans traced resistance in COMEX December gold to $432 an ounce and then April's 15-year high at $436.50, with support at $423-421, $416.10 and then at the low from Oct. 13 at $410.50.
Meanwhile, crude was near a new all-time high above $55 a barrel on Monday.
Spot gold fetched $428.05/8.80, above Friday's New York closing level at $423.95/4.70. Monday's afternoon London fix was at $429.15.
December silver traded at $7.37 an ounce, up 3.7 cents, within a range of $7.36 to $7.53 range, on the back of gold's gains.
Evans viewed slight resistance at $7.42, followed by the $7.80-$8.00 area, while support rested at $7.15 and then at $6.91.
Spot silver hit $7.33/36, versus its prior late quote at $7.28/31. It fixed on Monday at $7.44.
January platinum rose $5.1 to $850 an ounce. Spot platinum touched $847.00/851.00.
December palladium advanced $2.60 to $218.55 an ounce. Spot palladium climbed to $215.00/219.00.
© Reuters 2004
