Spot gold has moved through the $700-per-ounce level, while platinum has surged to a fresh record high.
Precious metals are being buoyed by geopolitical factors, as hopes for a resolution of Iran’s nuclear stand-off fade and the weaker dollar prompts investors to seek refuge among the precious metals.
At 7.45am on Wednesday, gold was quoted at $702,40/oz, while platinum was at $1 256,50/oz.
AFX reports that gold futures closed above $700 an ounce on Tuesday for the first time since October 1980, tallying a gain of more than 18% in just the past month.
“Underscoring the deteriorating Iran situation and United States dollar woes, the precious-metals complex continues to gain new friends on a daily basis, regardless of prices not seen for a generation,” said Jon Nadler, an investment products analyst at bullion dealers Kitco.com, pointing out that prices have climbed about $110 per ounce in the past month.
“At this point, the flood gates are open,” he said.
Gold for June delivery climbed as high as $701,80 an ounce on the New York Mercantile Exchange, the highest futures level in almost 26 years, according to monthly charts from Thomson Financial. The contract closed up $21,60, or 3,2%, at $701,50. Futures prices are up more than 35% year-to-date and up almost 64% from the year-ago closing level.
Gold prices have climbed more than $40 since the beginning of May alone, propelled higher by a now-familiar list of factors, including inflation fears, geopolitical worry, a weaker dollar and burgeoning demand from investment funds seeking better returns than are currently available in other asset classes, AFX said.
US Secretary of State Condoleezza Rice said a letter from Iranian President Mahmoud Ahmadinejad — Iran’s first communication with the US in 27 years — contained nothing new in the way of proposals that might help break the nuclear stalemate with the West, The Associated Press reported.
While details of the letter have not yet been released, it is understood to criticise US President George Bush for the Iraq invasion and for his handling of the September 11 attacks on the US, among other things.
“Overnight it became clear that, as had been suspected, the written message from Tehran to the White House contained not much more than platitudes and criticisms,” said Nadler. “Thus, the US administration is downplaying the episode and its significance, while the United Nations continues to be mired in inaction.”
Ministers came away from a meeting of the UN Security Council with Russia and China refusing to back the resolution favoured by France, the US and the United Kingdom that would open the door to trade sanctions against Tehran, according to news reports.
July platinum galloped to a new record at $1 243/oz, then closed up $37,40, or 3,1%, at $1 239.30/oz, while June palladium rose by $19,65, or 5,2%, to end at $394,90/oz, tapping at $395, a level not seen since 2002.
“Speculator/investor appetite” has been adding to platinum’s “already favourable fundamentals”, said James Moore, an analyst at TheBullionDesk.com, in a note to clients. But “volatility is set to remain high, particularly with next week being platinum week”, he said.
Johnson Matthey’s annual review of the platinum and palladium market is scheduled for release on Monday. — I-Net Bridge