Gold hits 28-year peak, platinum eyes all-time high

Spot gold rallied to $746.30 an ounce, its best level since January 1980, mainly on Japanese buying. It later dipped to $745.20/746.00 an ounce, still higher than $742.40/743.20 late in New York on Friday.

The upside target was pegged at $750 an ounce, although dealers also expect a technical correction.

‘With no signs of the dollar ending its slide against major currencies, bullishness is ample. But this does not exclude the market from a near-term pull back,’ said Pradeep Unni, an analyst at Vision Commodity Services in Dubai.

Record-high oil prices, the Federal Reserve’s surprise move to slash interest rates by 50 basis points and a struggling dollar have elevated gold’s safe-haven appeal and ignited buying interest from funds, speculators as well as retail investors.

‘There’s still room for the price to move to $750 and we can easily see $755,’ said a dealer in Singapore.

‘Basically, you look for buying opportunity. But do get out if you don’t feel comfortable, if there’s no follow through to the $755 level,’ he said.

Spot platinum hit an intraday high of $1,391 an ounce, within sight of last November’s record high of $1,395 an ounce, before dipping to $1,385/1,390 an ounce, unchanged from late New York levels.

Dealers noted a lack of physical buying with Chinese consumers away during the week-long holiday which started on Monday. Investors also digested news that a Japanese automaker had developed a technology to cut platinum use.

Japan’s Mazda Motor Corp said on Monday it has developed the world’s first catalyst for cars that employs single-nanotechnology to create a material structure that slashes platinum and palladium use by 70 to 90 percent. Automakers have been burdened with higher-than-expected commodity prices, and are looking for ways to reduce material use to save costs. Platinum is used in jewellery and auto catalysts.

‘Speculative buying is dominant in platinum. So far the market wasn’t surprised by Mazda’s news as it didn’t give specific date when it will use the technology,’ said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities.

‘The market is simply following the bullish trend now and buying platinum. There are very few strong fundamentals, but at the same time there are not so many reasons to sell platinum heavily now,’ Sugata said.

The most active platinum contract on Tokyo Commodity Exchange, currently August 2008 rose as high as 5,091 yen per gram—its best level since July 26. It closed 61 yen higher at 5,078 yen.

Platinum is a soft, ductile metal that is resistant to oxidation and high-temperature corrosion.

In currencies, the euro was steady at $1.4270 having pulled back slightly from record highs above $1.4280 hit on electronic trading platform EBS earlier on Monday.

The dollar extended its losses after falling late last week as the Fed’s favoured inflation gauge showed a muted rise in core consumer prices, supporting market expectations for further cut in interest rates.

The 1.8 percent year-over-year increase in the core PCE price index brought the reading within the Fed’s presumed comfort zone of between 1 and 2 percent.

Benchmark August 2008 gold futures on TOCOM ended 28 yen per gram higher at 2,786 yen—its loftiest level since April 1985.

COMEX futures also extended gains in Asia, with most-active December rising $3.4 an ounce to $753.4 an ounce—a 28-year high.

Spot silver rose to $13.81/13.86 an ounce from $13.71/13.76 late in New York.

Spot palladium gained to $348/352 an ounce, its highest since mid-August, from $343.00/348.00.

Precious metals prices at 0648 GMT

MetalLastChange Pct chg YTD pct chg Turnover

Spot Gold745.902.20+0.3017.34

Spot Silver13.800.04+0.297.39

Spot Platinum1385.002.00+0.1422.35

Spot Palladium346.002.00+0.584.22

TOCOM Gold2786.0028.00+1.0213.95 70802

TOCOM Platinum5078.0061.00+1.2219.37 44888

TOCOM Silver514.407.60+1.504.28 1664

TOCOM Palladium 1302.002.00+0.153.75 664

Euro/Dollar1.4252

Dollar/Yen115.07

TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.