LONDON, Sept 26: Gold firmed in Europe on Wednesday, consolidating a recent run to 28-year peaks, with underlying support from an ailing dollar hitting record lows versus the euro.
Platinum set a fresh peak for the year at $1,348.00 per ounce, fuelled by investor buying, having shaken off speculation that a strike at General Motors Corp would reduce demand.
Analysts said bullion was well positioned to attract additional investors, with jitters still rippling through markets over problems with credit and concern on the outlook for US economic growth seen boosting its safe-haven appeal.
We lost a bit of upside momentum and are consolidating around $730 as people are taking profits, but definitely the market sentiment remains positive, said MKS Finance analyst Frederic Panizzutti.
There have been several calls for higher levels and all the factors are in place for a sustained short-term bull-trend.
Spot gold stood at $730.50/731.10 per troy ounce, compared with $730.40/731.20 late in New York on Tuesday, when it dropped more than $1 as speculators booked profits on last week’s run to a 28-year high at $739.
The dollar hit a record low versus the euro for a fifth trading day in a row, stung by weak US consumer confidence and housing figures that fuelled expectations for another US interest rate cut next month.
Such a move, on the back of this month’s hefty 50 basis point cut to 4.75 per cent, would further erode the dollar’s yield appeal and make dollar-priced bullion cheaper for non-US investors.
In other bullion markets, Japanese gold futures rebounded.
Benchmark August 2008 gold futures on the Tokyo Commodity Exchange ended up 23 yen or 0.9 per cent at 2,731 yen a gram, having fallen to a one-week low of 2,706 yen on Tuesday.
The most-active December gold contract on the COMEX division of the New York Mercantile Exchange was down $1.80 at $737.00 an ounce in electronic trade.
Platinum stood at $1,332/1,337 an ounce from $1,343.90/1,350.90 late in New York, having set a fresh peak for the year at $1348.00, fuelled by investor demand.—Reuters
