Li Keqiang's India Visit
Chinese Premier Li Keqiang, smiling and effusive, was out to smooth ruffled feathers in India this week, promising to ease tensions and increase trade between Asia's fastest growing economies in his first trip overseas since taking office. Full Article | Slideshow
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Gold hits $1,300/oz record; silver a 30-yr top
NEW YORK/LONDON |
NEW YORK/LONDON (Reuters) - Gold hit a record high of $1,300 an ounce on Monday, extending a two-week rally of fresh records on concerns over an economic recovery, before easing off session highs as the dollar rose.
Silver tracked the yellow metal higher, rising to a 30-year high but also slipped from the previous high. Silver has gained nearly 30 percent so far this year.
Fund managers and industry experts say gold's rally has further to run in the longer term, As it provides a hedge against inflation amid expectations that central banks worldwide could resort to quantitative easing to support their economies. But, some add that it may correct its rapid rise in the short term.
"Momentum is still very much in favour of gold," said Jesper Dannesboe, senior commodity strategist at Societe Generale. "I wouldn't dare go against it and definitely wouldn't want to be short, there's good appetite to buy," he said.
Spot gold changed hands at $1,297.30 an ounce by 1:19 p.m. EDT (1719 GMT), after hitting an historic $1,300 an ounce, up from $1,295.60 quoted late in New York on Friday.
For a graphic on timeline of gold, click: here
In the near term, gold slipped off its early highs when the euro fell from a five-month high against the dollar, as nagging worries about fiscal debt problems in euro zone countries like Ireland gave traders an excuse to consolidate gains.
Bullion's rally accelerated last week after the U.S. Federal Reserve signalled its readiness to pump billions of dollars into the economy through purchases of government debt, a process known as quantitative easing.
"Every country in the world is giving signals that it could print money...what else are you going to trust apart from gold," said Sean Corrigan, chief investment strategist at Diapason Commodities Management.
U.S. gold futures for December delivery was up $0.70 an ounce at $1,298.80 an ounce, after rising earlier to $1,301.30, just short of an all-time high at $1,301.60 hit on Friday.
Industry experts see fresh highs for bullion. Delegates at the London Bullion Market Association annual conference forecast a price of $1,406 an ounce by September 2011.
The world's biggest miner of the yellow metal, Barrick Gold said bullion could see above $1,500 an ounce next year.
Central banks capping their gold sales would be another factor to support the prices. On Monday, Germany's Bundesbank said it will keep its gold sales to a minimum in the next 12 month.
In the shorter term, charts show bullion's rally might face resistance around $1,315-1,325 an ounce.
"I wouldn't call it a safe trade because everyone's has it now," Dannesboe said. "It's been running for quite some time, I believe a correction is due."
A potential correction could be limited, traders said, with the physical market still buoyant despite record high prices.
"There is buying even today despite gold touching $1,300 as the rupee is in a supportive mode," said Pinakin Vyas, assistant vice-president with IndusInd Bank. "The buying momentum would continue on upcoming festivals."
Silver jumped to its highest in three decades at $21.61 an ounce, but eased to $12.45 by the New York midday.
"The medium-term outlook for silver remains positive in our view and we therefore raise our medium-term price target to $25 an ounce," said metals strategist Michael Widmer at Bank of America Merrill Lynch in a research note.
The world's largest silver-backed exchange-traded fund, the iShares Silver Trust , said its holdings rose to a record high at 9,613.02 tonnes by Sept 24 from 9,582.59 tonnes on Sept 23.
Silver's main sources of demand are for use in industrial applications such as semi-conductors and jewellery. Spot platinum slipped to $1,630 an ounce versus Friday's last quote of $1,637.70 an ounce. Spot palladium was at $551 an ounce, down from $556.70 an ounce previously.
(Additional reporting by Lewa Pardomuan in Singapore, Graphic by Catherine Trevethan; Editing by Marguerita Choy)
(For more business news visit Reuters India)
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