Gold Pauses After Bush's Talk on Iraq
Wed January 29, 2003 04:27 AM ET
LONDON (Reuters) - Gold markets showed little reaction on Wednesday to tough talk by President Bush on Iraq, with bullion prices little changed by the end of the annual U.S. State of the Union address.
Spot gold XAU= was trading at $369.80/370.55 an ounce at 4:17 a.m. EST versus a late New York quote of $369.50/370.25 recorded some hours before Bush began his speech.
"There was nothing new in his comments, which hasn't already been factored into the gold price," said Standard Bank London in a report.
Before the speech, bullion dealers said there was potential for gold prices to go either way. But it bandied around a 50-cent range during the roughly one-hour address, which also discussed issues such as domestic health care and the fight against AIDS.
"The speech covered a lot of ground that would not hold much influence in the market," said a bullion dealer in Asia.
Gold, a so-called "war commodity," historically is scooped up by nervous investors ahead of armed conflicts to protect against falling currency and stock markets.
Gold is up seven percent so far this year after leaping nearly 25 percent in 2002.
Bush braced Americans for the possibility of war with Iraq, saying "some crucial hours may lie ahead" for U.S. troops in the region.
Bush said if war comes with Iraq, "we will fight with the full force and might of the United States military -- and we will prevail."
Bullion raced to its highest since December 22, 1996 -- $372.60 an ounce -- on Monday after chief United Nations arms inspector Hans Blix sharply criticized Iraq for not divulging enough information about its arms programs.
Gold has a history of price volatility. It is still well below a record high of $850 an ounce fetched in early 1980, and within 24 hours of the start of the Gulf War in January 1991, it fell more than $25 from just above $400.
Rising oil prices, an early indication of looming inflation, have also attracted investors to gold as an alternative to stocks and cash.
Bullion was supported in European trade by losses in the region's stock markets .FTEU3 and a weak dollar EUR= .
In other precious metals, silver XAG= was quoted at $4.85/4.97 an ounce from New York levels of $4.86/4.88.
reuters.com |
