London | Monday
GOLD prices held firm on Monday against a background of Middle East tension and investor uncertainty triggered by Argentina’s banking crisis and the political fallout from France’s presidential election.
Gold was fixed in London at $303,35 a troy ounce, up from its previous fix of $301,80, to consolidate itself above the psychologically crucial $300 mark.
”With no shortage of political activity around — the Middle East, French elections, Venezuela, Argentina — any one of the elements has the potential to influence gold, either directly or via currencies,” said John Reade, analyst at UBS Warburg.
Gold is a traditional dollar-denominated safe haven for investors, amid uncertain times, and has been branded by some professional traders as a ”war commodity”.
Gold has hoisted itself close to its highest level in more than two years since Israel’s military thrust into the West Bank last month.
Israeli troops kept Yasser Arafat’s headquarters and Bethlehem’s Nativity Church under tight siege after pulling back to the outskirts of main West Bank cities battered in a sweeping military offensive.
The United States said it was trying to defuse the stand-offs, which are keeping tanks and troops in the heart of the Palestinian-ruled cities of Ramallah and Bethlehem.
Tanks rumbled out of Nablus and most of Ramallah on Sunday, but remained around the Bethlehem church revered by Christians as the birthplace of Jesus, now a sanctuary for militants trapped with more than 200 policemen, clerics and civilians.
Spot gold was last at $303.70/304.30 from Friday’s New York close of $302.10/302.60.
”Gold continues to benefit from its recent reincarnation as a safe-haven asset, with speculators and funds in particular sitting on their largest gold holdings for a long time,” Standard Bank London said in a report on its website.
”Although these positions are well documented, the specs continue to switch from other investment vehicles into gold as fears persist of further terrorist attacks and a repeated surge in Middle East tensions.”
ARGENTINA, JAPAN SUPPORT
Gold was also supported by fresh concerns over Argentina’s banking system and ability to pay its debt.
The Argentine government on Sunday resisted demands by the International Monetary Fund for more provincial budget cuts as a condition for a sorely needed aid package.
A delay in reaching an IMF deal has come amid a steady bleeding of deposits from Argentine banks, forcing the central bank on Friday to declare an indefinite suspension of banking and foreign exchange activity beginning on Monday.
Japanese demand continued to be robust, according to official data released in Tokyo. Japan’s imports of gold surged 569,2% from a year earlier to 13 183 kilograms in March, the Ministry of Finance said.
This comes after a 662,1% jump to 19 754 kilograms in February, when Japanese savers piled money into ”safe” assets ahead of the end of full guarantees for term bank deposits.
Japan’s gold imports rose 14,9% to 77 088 kilograms for fiscal 2001/02 ended in March, the data showed.
Other precious metal markets were buoyed by gold’s performance.
Ongoing tightness in the forward market and worries about the potential for another labour strike at Anglo American Platinum’s precious metals complex next month saw platinum hold at $555/560 from $554.00/561.60 at the previous New York close.
Palladium was steady at $360/370 from $368/383 at the New York close. Silver tracking gold firmer with spot last at $4,52/4,54 from New York’s previous close of $4,49/4,51 an ounce. – Reuters