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Gold hits 11-mth high, eyes $1,000 on haven demand

Spot gold struck a high of $992.30, its strongest level since March 19. At 1223 GMT it was at $992.00/994.00 an ounce against $973.75 in New York late on Thursday.

The metal is poised to rise further, possibly targeting last March’s all-time high of $1,030.80 an ounce, analysts said.

“The rally we’ve seen in the last few days has been very much led by investment demand,” Barclays Capital analyst Suki Cooper said.

“Investors aren’t looking at the normal drivers—they are sidelining the dollar strength, sidelining deflationary concerns and lower oil prices. They are very much buying gold as a safe-haven asset,” Cooper said. “There is potential for us to breach the $1,000 level.”

Meanwhile, U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $17.30 to $993.80 an ounce. Earlier they hit $994.20 an ounce, their strongest since July 22.

Saxo Bank senior manager Ole Hansen said the deteriorating macroeconomic picture and inflows into exchange-traded funds were currently the main influences on the gold price, now that the metal’s usual relationship with the dollar had broken down.

ETFs

More investment flowed into precious metals-backed ETFs on Thursday, with figures released showing both the largest gold ETF and the biggest silver-backed fund climbing to record levels.

New York’s SPDR Gold Trust said its holdings rose nearly five tonnes to a record 1,028.98 tonnes on Thursday, while the iShares Silver Trust’s silver holdings climbed 18.4 tonnes to an all-time high of 7,892 tonnes.

Equity markets tumbled on Friday, with world stocks dropping to their weakest since November. The U.S. Dow index hit a six-year low on Thursday. Falling stocks boost the appeal of safe-haven assets like gold.

The precious metal’s usual external drivers, oil and dollar, exerted little influence. Gold traditionally moves in the opposite direction to the U.S. currency, as it can be used as a hedge against dollar weakness, and in line with oil.

The dollar climbed on Friday, along with the yen, as global economic woes, falling equity markets and worries about the prospect of a deepening recession in eastern Europe sparked buying of safer assets.

Grim euro zone data further pressured the euro versus the dollar. Key gauges of euro zone services and manufacturing activity released on Friday unexpectedly crashed to new lows in February.

Oil prices, which often pull gold in their wake, weakened as fears over the faltering global economy depressed the demand outlook.

Among other precious metals, spot silver climbed to $14.37/14.43 an ounce from $13.01.

Spot platinum edged up to $1,089/1,094 an ounce from $1,066.50, while spot palladium was unchanged at $213.50/217.50 an ounce from $213.50.

Anglo American, whose Anglo Platinum unit is the world’s largest platinum producer, saw its shares tumble more than 10 percent after it scrapped its final dividend and said it will cut 19,000 jobs.

The company has sliced its 2009 platinum output forecast by 300,000 ounces, Chief Executive Cynthia Carroll said.