10th Jan
Gold hits record, copper soars as equities slide
GOLD stormed to a fresh record high and copper hit a two-month peak yesterday as investors sought to hedge against inflation or to find alternatives to weak equity markets.
Spot gold hit a record US$891 an ounce, surpassing the previous high of US$881.10 reached on Tuesday, while London Metal Exchange copper futures rose to their highest in two months.
Oil prices were also firm, moving back towards US$100 a barrel, as equity markets fell in Asia following a 1.9 per cent drop on Wall Street.
‘The speed of gold’s rise is very fast but the market is focusing on taking gold towards US$900 in the near term,’ said Mr Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.
The strong debut of gold futures on the Shanghai Futures Exchange helped boost spot prices. The June futures contract hit its upper cap of 230.99 yuan, equivalent to around US$990 an ounce. That implies Chinese investors expect a rise in gold prices in dollar terms of some 10 per cent.
Comex gold for June delivery was around US$904 an ounce.
‘Gold is rallying all by itself. It’s not a silver thing, it’s not a platinum thing. Prices had gained on the weaker US dollar and rising oil, but now, new factors are coming in,’ said Mr Jonathan Barratt of Commodity Broking Services in Australia. ‘My feeling is that either there is a big hedge being unwound or it’s rising on inflation fears. If I had to hang my hat on one, I’d say inflation.’
He said rising commodity prices were increasing wage pressure and driving up inflation in countries such as China.
‘The big fear in Asia is that China and India will start to export inflation. There are a lot of relatively inexperienced investors looking to hedge against that and the message has always been: In times of inflation, buy gold. And that will attract a lot of individuals to the new Shanghai contract,’ he said.
Source : Straits Times - 10 Jan 2008
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