SINGAPORE - Gold rose 1 per cent to its highest level in nearly 25 years yesterday as funds in Asia poured money into the precious metal, driven by expectations that United States interest rates will not rise much further.
"We are very much in an uncharted territory," said Darren Heathcote,
head of trading at N.M. Rothschild in Sydney. "I'd imagine the sort of target in the next few days will probably be US$550 [$793] if we don't hold below US$542 when we close."
Spot gold rose as high as US$544 an ounce, its highest level since March 27, 1981, when it hit US$547.25. It was later quoted at US$543.50/544 an ounce, still higher than US$538.30/539.00 in New York on Friday.
Dealers said worries about rising energy costs, general security-related fears and China's announcement last week that it planned to explore new ways of using its foreign exchange reserves and broadening investment scope also supported gold.
"The US dollar is weakening. China is talking of diversifying its foreign exchange holdings. The global economy remains strong. So in a fundamental sense, there are plenty of reasons to be positive on gold," said Craig James, chief economist at Commonwealth Securities in Sydney.
Talk that China and other central banks in Asia might diversify some reserves into gold emerged in the market last year and continues to underpin sentiment. China holds 600 tonnes of gold, which account for only 1.2 per cent of its foreign reserves, says the World Gold Council.
Other precious metals tracked gold's gains. Platinum moved closer to the magic US$1000 an ounce. Spot platinum rose to US$997/1002 an ounce from US$993/998 late in New York and sister metal palladium rose to US$270/275 an ounce from US$267/271. Silver inched up to US$9.15/9.18 from US$9.09/9.12.
- REUTERS
