Gold rallies on softer dollar, platinum eyes report

LONDON - Gold prices rallied on Monday as a weaker dollar and firm oil prices boosted investor confidence, while the platinum market awaited a key report on supply and demand, analysts said.

By (Reuters)

Published: Mon 14 May 2007, 6:37 PM

Last updated: Sat 4 Apr 2015, 11:01 PM

Spot gold at 1000 GMT was up at $672.65/673.15 an ounce from $670.60/671.10 late in New York on Friday.

The precious metal hit a one-month low of $664.00 last Thursday when a dollar rally and an equity market sell-off prompted risk-averse investors to trim their gold holdings.

“The week has started with a more positive tone, said Simon Weeks, director of bullion at ScotiaMocatta. “The dollar is weaker and there are political concerns in Iran again.

Iranian President Mahmoud Ahmadinejad on Monday threatened ”severe” retaliation if the United States attacked his country, which is locked in a standoff with the West over its nuclear programme.

The dollar was lower, off last week’s one-month high against the euro ahead of key inflation data later this week and speeches from Federal Reserve officials, which could give the market clues about the future direction of interest rates.

London Brent crude oil prices rose above $67 a barrel, the highest since May 1 as Saudi Arabia kept OPEC supply curbs in place through June and supply disruptions in West Africa.

“Oil is a support, but it could quickly be forgotten if the dollar turns lower,” a trader said.

Little to spare

Spot platinum was stronger at $1,335/1,340 an ounce compared with $1,328/1,333 late on Friday. Last week it hit $1,340 an ounce, the highest since November 21.

Traders report a subdued platinum market with all eyes on a a supply and demand report from refiner Johnson Matthey. Expectations are the report will highlight growing demand from industrial users.

Also on the radar are new exchange traded platinum funds, which could add significantly to new demand.

“There is very little material to spare. Only a small portion of the total is available for trading, with the rest tied up in contracts,” Numis Securities said in a note.

“This will make it very difficult for funds to secure the metal, although given time and enough money it is possible, despite producers’ resistance.”

Platinum prices in recent weeks have also been supported by strikes such as that at South Africa’s Aquarius Platinum, where a court last Friday ordered workers at the company’s mines to return to work.

“There appears to be risk of further strike action in South Africa as the National Union of Mineworkers plans to start wage talks with local platinum producers,” Numis Securities said.

“With supply/demand so tight, any serious outage at a major mine could push up prices rapidly, particularly since South Africa supplies around 77 percent of the world’s platinum.”

Palladium was firmer at $362/367 an ounce, compared with $361/365 in New York, and silver was easier at $13.17/13.21 an ounce from $13.20/13.25.