Gold at two-month highs on dollar weakness
Fri May 9, 2003 06:15 AM ET
LONDON, May 9 (Reuters) - Gold was fired to fresh two-month highs in Europe on Friday as the dollar fell back still further against a surging euro, metals analysts said.
"Once again gold will look to the currency markets for intra-day direction today, but with the euro looking bullet proof at present, it may only be a matter of time before gold breaks through the $350 level," said Standard Bank London.
Spot gold was quoted at $348.70/349.20 an ounce at 0955 GMT, up from New York's last quoted $348.35/348.85 as the dollar hit new four-year lows versus the euro .
Bullion traded as high as $349.00 an ounce, its firmest level since March 12, according to Reuters graphics.
"With the clear break of $345 and yesterday's strong closing we should be able to extend the currency driven rally to $354. The fund buying seems far from being exhausted, while the prices against currencies remain reasonably cheap," said Andreas Maag, metals analyst at UBS Warburg.
With the European Central Bank's benchmark rate at 2.50 percent compared to the U.S. benchmark rate of 1.25 percent, investors are trading their dollars for euros and shifting cash into the euro zone in search of higher yields for their money.
This has also aided safe-haven bullion which traditionally benefits from a weaker dollar.
In other precious metals, silver edged down to $4.77/4.79 an ounce from New York's previous $4.78/4.80, while palladium gained to $158.00/163.00 versus $157.00/162.00.
"Palladium is seeing good two-way interest below $160, with physical demand being spurred by the relatively low levels of the metal with noted buyers in Japan," said Barclays Capital.
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