Gold prices surged above $900 a troy ounce for the first time as investors on
Monday sought refuge from a weakening US dollar and further losses on Wall
As the spot price hit $914 an ounce in London, traders were betting it would
reach $1,000 within three months. The surge to a record high was also prompted
by fears that lower interest rates and higher food and energy commodities would
trigger an inflation rise.
John Hill, an analyst at Citigroup in New York, said gold prices were likely to
test the $1,000anounce level in 2008. Key gold traders such as UBS, Mitsui
Precious Metals, Barclays Capital and The Bank of Nova Scotia expressed a
similar view. “Prices could explode to multiples of these levels in the event of
a fullblown US recession,” he added.
David Holmes, head of precious metals at Dresdner Kleinwort in London, added
that investors were already buying option contracts that would be profitable
only if gold prices surged to levels above $1,000 an ounce to as high as $1,500
Speculators on the New York gold market hold 10 bets on higher prices for each
one on lower prices, according to analysts. Investors in Tokyo and on the
Shanghai gold futures market are also betting on higher prices.
Gold’s strength boosted platinum to a high of $1,590 an ounce and silver to a
27year high of $16.58 an ounce.
The US dollar fell to $1.4890 against the euro, its weakest level in seven
Meanwhile, agriculture commodities jumped as the weaker dollar attracted
overseas buyers and after signs that European Union efforts to boost agriculture
production had failed so far in spite of the suspension of the limits to grain
The EU last year scrapped a rule requiring farmers to set aside 10 per cent of
their land in an effort to increase output. However, French and German farmers,
which account for half of the EU15 production, sowed less than 2 per cent more
The European failure follows a similar pattern in the US. Soyabean and rice
prices surged to an alltime high, corn jumped to a 12year record, and wheat
prices surged, with the new crop futures hitting alltime highs. In Paris,
rapeseed futures traded above €450atonne for the first time.
** Check out our
Prepaid Phone Cards