GOLD extended gains to rise nearly 3% yesterday as the dollar lost ground against the euro, boosting the precious metal’s appeal as a currency hedge. Gold and platinum prices traded within $5 of one another, threatening to breach parity for the first time in 12 years, as platinum remained range-bound ahead of a decision on a $14bn plan to bail out US car makers.
Platinum, which is mainly used as a component in catalytic converters, is particularly vulnerable to a downturn in the automotive sector.
Spot gold hit a high of $833,80/oz and was quoted at $826,50-$828,50/oz by midafternoon, up from $809,90 in New York on Wednesday.
Spot platinum was at $837-$857/oz against $822. “The spread between gold and platinum has now shrunk,” Pradeep Unni of Richcomm Global Services said. “This directly signals the current economic crisis and the downturn in the auto-sector industry.
“If the auto market bail-out goes through, the spreads may widen again,” he said. “Gold, meanwhile, is recovering with the euro’s gain.”
In sterling terms, gold rose to a record high of £559,18/oz , up from £546,51/oz late on Wednesday.
The euro hit a record high against sterling of 88,97p. US gold futures for February delivery rose more than 3% to a high of $835,30/oz, and were later quoted at $827,60, up $18,80. Reuters
