Gold moved to fresh six-week highs in European trading on Friday, fanned higher by prospects of all out US-led military action against Iraq and jitters in as the first anniversary of the September 11 attacks approaches.
Safe-haven gold was set or ”fixed” in the London morning session at $317,90 a troy ounce, up from the previous $317,55 an ounce to reach its highest fix level since July 23.
The twice-daily fixing in the wood-panelled room of aristocratic merchant bank N.M.Rothchild and Sons follows developments in the 24-hours spot market which was holding above $318,00 an ounce.
London-based analysts and traders pinned the latest gains on nervous buying as Washington stuck by its goal of ”regime change” in Iraq and as the first anniversary of last year’s attack on landmarks in New York and Washington loomed.
Strikes by US and British warplanes against an air defence facility in the southern ”no-fly zone” of southern Iraq on Thursday also fed into buying for safe-haven gold, traders said.
”Investors continue to seek gold’s safe-haven properties, as US-Iraq tensions rise ahead of the September 11th anniversary,” said James Moore, metals analyst at TheBullionDesk.com.
Gold’s latest gains put the metal 17% higher than at this time last year, making it one of the strongest performing financial assets.
”So long as prices remain supported at $318, New Yorkers could well attempt to break psychological resistance at $320 with $325 objective looming ahead,” said Standard Bank London in a market report.
GOLD THRIVES
Gold shot up nearly 10% immediately after the September 11 attacks to $295 as investors sought a bolt hole amid the financial chaos set off by the airplane suicide attacks.
Bullion gained more than $40 to reach over $400 when Iraq invaded Kuwait in 1990, surging with oil prices.
Fears of a repeat attack on the US mainland were a major factor in gold’s eventual move to a 2-1/2 year high of $330,30 in June 2002.
That rally was also helped by plunging stock markets, a fragile dollar, Israeli-Palestinian violence and moves by leading gold miners to cut their forward sales of the metal to take advantage of rising spot prices.
US President George Bush took his case against Iraqi leader Saddam Hussein to the American heartland on Thursday, warning of the consequences of inaction and promising to provide more information about the threat Iraq poses to the nation and its allies.
Bush said he hoped to build an international
”consensus” for pre-emptive action to prevent countries like Iraq from using weapons of mass destruction.
Despite its gains, the yellow metal held well below record highs of $850 in 1980 against a backdrop of the Iranian revolution, the start of the Iran-Iraq war and the Soviet incursion into Afghanistan.
In other precious metals, silver was quoted at $4,52/4,54 an ounce by 0953 GMT, unchanged from the New York close on Thursday.
Platinum was quoted at $541,00/546,00 an ounce, up from the New York close of $537,00/545,00 an ounce and palladium at $322,00/328,00 an ounce from $321,00/333,00 an ounce. – Reuters