Gold steady below $1,000
Written on September 8, 2009
Gold held broadly steady on Monday just shy of $995 per ounce, consolidating stellar gains last week that took it tantalizingly close to the $1,000 psychological level, with buyers encouraged by dollar weakness.
Silver took support from gold’s strength and gains in benchmark base metal copper, hitting a high of $16.34 an ounce, its firmest since August 2008.
Spot gold stood at $994.60 per ounce by 1555 GMT (11:55 a.m. EDT), broadly steady from $993.40 quoted late in New York last Friday.
The price rose as high as $997.20 last week — its highest since February, when it briefly topped $1,000.
Gold found support at lower levels but trading ranges were narrow and volumes were said to be thinner, with investors restraining themselves due to Monday’s U.S. public holiday.
A confluence of dollar weakness — making the metal more attractive to non-U.S. investors — and doubt about the sustainability of global economic recovery prompted a spate of investors to seek refuge in gold last week, as prices hit six-month highs.
Analysts said a run to $1,000 was looking inevitable.
“It will have a go, we are within reach,” said Ole Hansen, senior manager at Saxo Bank. “Within the first few days of this week we should have an attempt.”
MIRROR OF UNCERTAINTY?
Some analysts said the higher gold price reflected some uncertainty across markets on how central banks will untangle themselves from fiscal stimulus aimed at reviving economic growth, as well as dollar weakness.
“If there is even a hint of worry that central banks are being over-generous in the extent and duration of their fiscal stimuli, gold will become everyone’s touchstone,” Bill O’Neill, portfolio strategist at Merrill Lynch Global Wealth Management, said.
The Group of 20 finance ministers and central bankers said over the weekend they would not remove economic stimulus until the global recovery was well entrenched.
While some analysts have argued the case for gold as a hedge against potential inflation when central banks try to navigate away from quantitative easing, others are less convinced — questioning the sustainability of bullion over $1,000.
“I don’t buy the argument about inflation concerns, it seems to be far too far-fetched at the moment when we’re still looking at a deflationary environment,” said David Wilson, director of metals research at SocGen in London.
PALLADIUM INTEREST SURGES
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