Iraq fears, Sept 11 anniversary drive gold higher
By Steven Swindells
LONDON, Sept 5 (Reuters) - Jittery investors piled into the gold market on Thursday as Washington lined up a possible military strike against Iraq and the September 11 anniversary loomed.
Gold <XAU=> hit $316.80 a troy ounce, up from $314.70/315.20 at the New York close on Wednesday, to reach its highest point since August 14.
The gains put the metal 17 percent higher than at this time last year, putting it among the strongest performing financial assets. London-based analysts and traders pinned the latest gains on nervous fund buying ahead of the first anniversary of last year's attack on U.S. landmarks in New York and Washington.
"One cannot underestimate the importance of the anniversary of September 11, particularly in light of the United States preparing for war against Iraq," said Peter Hillyard, head of European metal sales at ANZ Investment Bank.
Gold shot up nearly 10 percent immediately after the September 11 attacks to $295 as investors sought a haven amid the financial chaos set off by the airplane suicide attacks.
Fears of a repeat attack on the U.S. mainland were a major factor in gold's eventual move to a 2-1/2 year high of $330.30 last June.
That rally was also helped by plunging stock markets, a fragile dollar, Israeli-Palestinian violence and moves by leading gold miners to cut their forward sales of the metal to take advantage of rising spot prices.
"Gold looks set to be supported and to move higher as we approach the anniversary of the 9-11 attack on the U.S. and the expectations of an attack on Iraq intensifies," said John Reade, metals analyst at UBS Warburg.
U.S. President George W. Bush said on Wednesday he would ask Congress to back possible military action against Iraq and would outline the "serious threat" posed by Iraq's arms programme at the U.N.
Seeking to blunt criticism that he has failed to make a case for any strike against Iraq, Bush said he would lay out his arguments against Baghdad in a Sept. 12 speech at the U.N. and in consultations over the next week with the leaders of Britain, Russia, China, France and Canada.
Gold gained more than $40 to reach over $400 when Iraq invaded Kuwait in 1990.
It topped $850 in 1980 against a backdrop of the Iranian revolution, the start of the Iran-Iraq war and the Soviet incursion into Afghanistan, which spurred unprecedented buying in gold.
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