AP: DJ PRECIOUS METALS: Asia Spot Gold Holds Gain, Poised For More
Spot gold held strong overnight gains in Asia Thursday, and strong investor demand through gold exchange traded funds is likely to boost prices further, putting a push to $1,000 a troy ounce within reach, traders and analysts said.
Prices surged past strong resistance at $930/oz overnight to a near seven-month high of $947.40/oz, with investors disappointed by a lack of detail in the U.S. bank bailout plan and concerned about ongoing instability in the global financial system and stock markets.
'Gold is likely to make further headway while gold holdings in ETFs (exchange traded funds) are increasing. There is a worry about large open interest making gold vulnerable to liquidation, but this time gold should be less prone to profit taking,' said Anderson Cheung, head of precious metals at Mitsui Bussan in Hong Kong.
Gold holdings in the world's largest ETF, the SPDR Gold Trust, rose to 935.09 metric tons on Feb. 11, up a massive 44.37 tons in one day alone.
'These investors are seeking gold for the longer term. Funds and speculators are a lot less powerful than last year,' said Anderson.
Craton Capital, which operates precious metals equity funds, said gold looked like a 'no-lose' investment regardless of how the economic situation develops.
The potential drag from a weak jewelry market was overstated given strong investment flows, Craton said in a note.
'It is interesting to note that the very strong investment demand over the past few weeks is more than offsetting the recessionary related decline in jewelry demand,' said Craton.
Strength in the platinum and palladium market continued Thursday, despite the desperate situation of carmakers that use both metals in catalytic converters.
Aside from technical strength, short covering appeared to be the force that has boosted platinum by 8% since the start of the week to a four-month high of $1,077.50/oz.
'People went short in white metals because of the economic outlook but with gold rising so strongly now, they are worried prices will rise on gold's coattails,' said Cheung.
At 0719 GMT, spot gold traded at $940.15/oz, up $1.05 on the New York close. Silver stood at $13.69/oz, up 16 cents. Platinum traded unchanged at $1,068.00/oz, while palladium was up $1.50 at $214.50/oz.
