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Gold hits record above $900; platinum, silver surge

SINGAPORE - Gold hit a record high above $900 an ounce on Monday as turmoil in financial markets, expectations of aggressive US rate cuts and a falling dollar helped raise the metal’s safe-haven appeal.

Platinum also hit a record while silver touched a 27-year peak.

Spot gold hit an all-time high of $909.30 an ounce, against $895.70/896.50 in New York on Friday.

COMEX gold futures touched $911.20 an ounce, surpassing Friday’s record high of $900.10. The most active February contract was later quoted at $910.0, up $12.3 an ounce.

Japanese gold futures were closed for a holiday.

“There is blue sky ahead of us and there is room for gold to go higher. We are in an uncharted territory, really,” said Darren Heathcote of Investec Australia in Sydney. “We have a weaker dollar and that’s encouraged people to buy gold.”

Investors have bought gold as a safe-haven asset after the dollar dropped on expectations the Federal Reserve would cut interest rates by an aggressive half-percentage point at its Jan. 29-30 policy meeting to rescue the US economy.

Fears of further subprime mortgage-related write-downs in the US financial sector and inflation fears driven by record-high crude oil also attracted buying from investors and speculators.

“I can see there’s some short-covering here and there,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

“Nobody knows what the next target is -- $910, or $920 and even $950. We don’t know. There’s short-covering everywhere.”

The euro jumped to $1.4880 on electronic trading platform EBS, its highest level since late November and within sight of a record high of $1.4968 hit that month.

“Dealers just don’t sleep nowadays. Gold broke $900, and there was buying on breakout. It was very, very fast,” said a dealer in Singapore.

But some dealers said gold could have trouble staying above $900 as high prices were likely to turn away jewellery makers and other physical buyers.

“I still think it’s not sustainable. The physical sector is not too enthusiastic to purchase here,” said William Kwan, a dealer at Phillip Futures in Singapore.

“On the speculative side, the small speculators have already gotten out of their shorts,” he added.

Gold’s 14-day relative strength indicator (RSI) rose to 85.95 on Friday as gold hit a record, and hovered above 80 on Monday. The market views an RSI of 30 or less as oversold and 70 or more as overbought.

In Singapore, dealers noted selling from holders who cashed in on gold’s gains as well as limited purchases from jewellers at lower levels.

Platinum hit record high of $1,578 ounce, up from $1,562/1,566 an ounce in New York.

Silver rallied to its highest in 27 years at $16.56 an ounce, up from $16.19/16.24 late in New York.

Palladium rose to $377/381 an ounce from $375/379.