Gold futures near $665 mark on weaker dollar, Iran worries
- From: bromselick@xxxxxxx
- Date: 2 May 2006 07:45:45 -0700
Familiar formula for gains: Iran jitters, weaker dollar --
By Myra P. Saefong, MarketWatch
Last Update: 10:18 AM ET May 2, 2006
SAN FRANCISCO (MarketWatch) -- Gold futures rose to a quarter-century
high near $665 an ounce Tuesday morning, as a weak U.S. dollar, strong
energy prices and concerns about Iran's nuclear program fed into
investment demand for the precious metal.
"While a correction is surely out there, the numerous bullish
fundamentals have created the 'perfect storm' for gold and silver,"
said Peter Grandich, editor of the Grandich Letter. "We are not likely
to see this again in our lifetime."
Gold for June delivery was last trading up $3.30 at $663.50 an ounce on
the New York Mercantile Exchange, after topping at $664.50. Futures
prices haven't traded at these levels since November 1980.
The benchmark gold contract climbed $5.70 on Monday, leading a
broad-based advance in the metals sector as the dollar hit a one-year
low against the euro and a seven-month low against the Japanese yen.
The dollar remained under pressure Tuesday as investors awaited Federal
Reserve Chairman Ben Bernanke's speech on Wednesday for more clues on
the U.S. interest-rate outlook.
Meanwhile, July silver futures were up 21.5 cents, or 1.5%, at $14.18
an ounce. The metal's recent peak of $14.74 was seen April 19, marking
the highest futures level in 23 years.
In the latest developments surrounding Iran, leading diplomats from the
five permanent members of the United Nations Security Council --
France, the U.K. the U.S., Russia and China -- and a representative
from the German government were to meet in Paris to discuss the
council's next step in its effort to pressure Tehran into halting
uranium enrichment.
Manuchehr Mottaki, Iran's foreign minister, said Russia and China have
told the Tehran government they will veto any attempt to impose
sanctions or attack militarily, the BBC reported, citing an interview
in Tehran newspaper Kayhan.
"There is a very wrong assumption held by some that the West can do
anything it wants through the Security Council," Mottaki is quoted as
saying.
Tuesday's Paris meeting comes ahead of a formal May 9 meeting in New
York at which foreign ministers from the council member countries and
Germany are due to meet to discuss some sort of resolution.
As the financial markets watch the Iran situation closely, a per-ounce
price of $700 for gold "now looks likely from current price levels over
the coming weeks unless there is some significant negative event to set
the market back," said John Meyer, a mining analyst at Numis
Securities.
Rounding out Tuesday's early metals action, July platinum was down 80
cents at $1,177 an ounce and June palladium lost $3.25 at $383 an
ounce. July copper dipped 4.4 cents to $3.2765 a pound.
On the supply side, gold inventories were down 85,082 troy ounces at
$7.61 million troy ounces as of late Monday, according to New York
Mercantile Exchange data. Silver supplies to 123.6 million troy ounces,
down 48,423 troy ounces, while copper supplies were down 458 short tons
at 16,674 short tons.
On the equities side, indexes tracking the metals-mining sector headed
modestly higher on the heels of a two-session win.
The Amex Gold Bugs Index (HUI: news) rose by 0.4% to stand at 382.19,
with a 1.5% move higher in shares of Agnico-Eagle Mines (AEM: news) to
$37.46 pacing the benchmark's components.
The CBOE Gold Index ($GOX: news) reached 162, up 0.6%, and the
Philadelphia Gold and Silver Index (XAU: news) gained to 159.64, up
0.5%.
Myra P. Saefong is a reporter for MarketWatch in San Francisco.
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