Gold speeds past US$600 an oz

SINGAPORE - Gold raced above its fabled US$600 ($985) an ounce level yesterday, the highest since December 1980, as investors poured money into the metal on worries about inflation, Middle East tensions and uncertainties over the US dollar's outlook.

Silver tracked gold's gains and rose to another 23-year high before retreating, while platinum paused for breath after hitting a record high the previous day.

The soaring gold price briefly lifted shares of mining companies in Australia, the world's second-largest bullion producer after South Africa. Newcrest Mining, Australia's biggest gold miner, gained 1.5 per cent before dipping.

"We're there mate, we've done it," said Darren Heathcote, head of trading at N M Rothschild in Sydney.

Spot gold hit a high of US$602.40 an ounce before easing to US$601.60/602.40, higher than US$598.80/599.60 an ounce late in New York on Monday.

Gold, considered a hedge against uncertainties during troubled times, has risen more than 16 per cent this year, about 41 per cent in the past 12 months, and 100 per cent in four years.

The metal has also been rallying due to rising oil prices.

"The signals are still strong, people are still happy to buy in dips. While we're below US$600, the range is probably somewhere around US$597.50 and US$600. But if we break above US$600, we're probably looking to test that US$604.50 area," Heathcote said.

Investors have turned to surging commodities markets for investment alternatives to equities, bonds and foreign exchange, where returns have not been as good, said dealers.

Tensions in the Middle East over Iran's nuclear intentions, uncertainty about the US dollar's outlook, worries about rising energy costs and speculation that central banks will diversify into metals have also boosted gold's appeal, they said.

"The market is very aware of the so-called huge decline that is supposed to come, but people think it's not coming yet. I like this market," said a bullion dealer in Singapore.

"The target is really around US$615. The market has to go to that level to sustain the gains. The oil price is still very high and this gives a lot of feel-good factors," he said.

Spot silver rose to as high as US$12.90 an ounce.

Silver, both a precious and industrial metal, is used in jewellery, photography and dentistry.

The metal has been rising since Barclays Global Investors last year filed for US regulatory approval of its proposed iShares Silver Trust, which would trade on the American Stock Exchange and track the price of silver.

Each share would be worth one-tenth of an ounce of the metal.

Platinum was steady at US$1087/1092 an ounce but off a record high of US$1095 hit on Monday.

Sister metal palladium rose to US$357/362 an ounce from US$354/360 late in New York.

- REUTERS