January 29, 2008	Tuesday	Muharram 19, 1429

LONDON, Jan 28: Gold drifted higher on Monday to trade near record highs ahead of a U.S. Federal Reserve meeting, with a weaker dollar and production halts in South Africa seen supporting precious metals prices.

Markets are betting that the Fed will cut interest rates by as much as 50 basis points after the two-day policy meeting ending on Wednesday, following last week’s hefty 75-basis-point cut in a rare move between scheduled meetings.

The trend is still higher for the gold price as the dollar hasn’t been very strong recently and lower interest rates in the US are generally supportive of gold, said Michael Widmer, metals analyst at Lehman Brothers.

In the first quarter, you will expect prices to be relatively well supported. Spot gold rose as high as $921.50 and was quoted at $918.15/918.85 an ounce against $913/914 late in New York on Friday, when it rallied to a record high of $923.40.

US gold futures also sustained gains, with the most active February contract rising $8.2 an ounce to $918.90. It rallied to a record high of $924.30 an ounce on Friday.

Bullion investors also awaited a batch of data this week for clues on the US economy’s health, including new home sales figures later in the day and the monthly jobs report on Friday.

Gold looks set to benefit from further demand as investors seek to diversify their portfolios, factoring in some safe-haven type assets,” said James Moore, analyst at TheBullionDesk.com.

South African mining companies hope to resume production later this week after being allowed to carry out underground maintenance work in mines across the country that have been crippled by a power crisis.

The world’s biggest platinum producer, Anglo Platinum, and top gold miners Anglogold Ashanti, Gold Fields and Harmony all stopped mining after they were told by the state-owned power utility it could not guarantee supplies to their operations.

The platinum market is not very well supplied for the past decade, so another year of shortfalls can make a big difference, he said. Silver edged down to $16.40/16.45 an ounce from $16.43/16.48 on Friday when it hit a 27-year high of $16.61.

—Reuters