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Financial Times notes ''significant buyer'' of gold, maybe a central bank
Gold Climbs Near 23-Year High;
Silver Nears $9; Amex Gold Bugs Index at a Record
By Myra P. Saefong
CBSMarketWatch
Wednesday, December 7, 2005
http://www.marketwatch.com/news/story.asp?guid=94E493CE-7F0D-4B0A-
9A70-6A79802EA381&doctype=103
SAN FRANCISCO -- Gold futures climbed near their highest level in 23
years Wednesday and silver prices closed at a level not seen since
1987 with the recent rally in the precious metals showing no signs
of running out of steam as solid demand and high energy prices fuel
inflation concerns.
The metals prices marked a five-session win, driving a key index
that tracks the metals-mining sector to new heights.
"Gold has remained very strong despite expectations of pullbacks and
bouts of selling because there has been a group who has heavily
played the downside and were usually rewarded soon after," said
Peter Grandich, editor of The Grandich Letter.
"This time, however, they are caught between a rock and a hard place
thanks to very strong physical buying and momentum players now
flocking to gold," he said.
Gold for February delivery finished at $517.80 an ounce, up $4 for
the session having earlier peaked at $520.30 an ounce, the highest
futures level since February 1983.
Other metals were swept up in the rally, with silver for March
delivery up 8.5 cents to close at $8.877 an ounce after trading as
high as $8.945. January platinum rose $3.60 to close at $998.30 an
ounce and March copper added 4.45 cents to finish at $2.0315 a
pound. March palladium closed up $2.95 at $281.95 an ounce.
"We continue to be positive on gold, believing that
healthyunderlying supply/demand fundamentals in the form of Indian
fabrication, Chinese retail investment, and recycled Middle Eastern
petrodollar flows, set the stage for the next round of
macro/monetary catalysts to enter the market," said Citigroup
analyst John Hill.
The surge in gold prices of the past several months has come even as
the dollar has strengthened and the Federal Reserve has raised U.S.
interest rates, going against the typical pattern for the metal,
said Hill.
"Gold should be well-positioned if the U.S. economy slows sharply,
given debt and dual-deficit strains that would likely emerge, or if
the Fed attempts to reflate its way past near-term growth
impediments for the metal," he said.
Citigroup is expecting gold to average $470 to $490 an ounce in the
2006 to 2007 period, up from $441 an ounce through 2005.
"A seasonal correction in the first quarter of 2006 (as seen in 2003
and 2004) would not be a surprise," he said, although he continues
to recommend that investors remain buyers of gold and of gold
equities at current levels.
Earlier, CSFB raised its gold price estimates to an average of $486
an ounce in the fourth quarter from a previous $450 an ounce, and an
average of $500 an ounce in the first quarter of 2006 from a
previous $450 an ounce.
Analyst David Gagliano also raised his price target on Barrick Gold
to $30 from $28.
The benchmark indexes tracking the metals-mining sector closed
broadly higher Wednesday, with one touching its highest level on
record and others trading near their highest levels in almost 9
years following the multi-year highs in both gold and silver.
The Amex Gold Bugs Index (HUI) climbed to new heights, peaking at
264.87 for the session. It closed up 2% at 260.89.
The CBOE Gold Index (GOX) finished at 112.11 and the Philadelphia
Exchange Gold & Silver Index (XAU) ended at 121.98, with each up
1.9%.
Among the bigger gainers, shares of Barrick Gold closed with a 3%
gain and shares of Apex Silver Mines climbed over 2%.
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Ted Butler silver commentary archive:
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