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Investors turn to gold
Gold at 4-month high amid short-covering, stock market uncertainty
October 1, 1998: 8:36 a.m. ET
LONDON (Reuters) - Gold fixed at a four-month high Thursday but remained short of pivotal resistance at $300, dealers said.
London gold fixed at $299 an ounce, the highest since May 22 and sharply up on Wednesday afternoon's $293.85.
Jumps of $2.50 in U.S. trade overnight and again in Europe took gold to the new high, which dealers attributed to short covering by funds and safe-haven buying amid equity market uncertainty.
"I think the market generally is getting more bullish," said one London dealer.
"It all looked toppy yesterday, threatening to come back down, then out of the blue it cranked up again with some huge pieces of business going through," he said.
Sentiment toward gold has strengthened since the market hit a 19-year low of $270.75 bid Aug. 28, a point some dealers said should provide a base to its two-and-a-half year bear run from above $400.00.
Dealers said resistance at $300 remained a key number, with its rupture likely to prompt rapid moves higher and its survival signaling a triumph of bearish fundamentals over short covering or flight-to-quality arguments.
Tony Warwick-Ching, metals analyst for Flemings Global Mining Group, said in a report that arguments could be made for either direction with gold stuck in a $290 to $300 range.
"There are still strong arguments in favor of gold. Above all, lower U.S. interest rates -- with (Tuesday's) cut already criticized as inadequate -- and the prospect of a weaker dollar, which is almost but not quite in the bag," he said.
"Meanwhile, there is still a powerful residue of skepticism to be convinced," he added.
Michael Simon, senior manager mining trade and commodity finance at Mees Pierson Corporate Bank, said gold might move rapidly if it broke $300, but only as far as $315 or $320.
"To start reaching for the stars, you would have to see a serious imbalance in the financial markets," he said, adding that such imbalances show no sign of happening for now.
Gold was last sniffing at the $300 mark, trading at $299.80/$300.30 versus New York's Wednesday close of $296.70/$297.20.
Silver faced stiff resistance at $5.40 in its continued rally from last week's low in the $4.80s.
The metal was last unchanged versus its previous New York close of $5.36/$5.38.
Platinum was dull, with dealers unfazed by developments in strike talks at involving South Africa's Impala Platinum Holdings Ltd.
The company said talks with union officials had failed to end a two-day strike at its Springs refinery complex. South Africa's biggest mining union and Impala have been deadlocked over wage talks for several months.
The precious metals refinery produces about 4,000 ounces of platinum and 2,000 ounces of palladium daily.
Platinum was last at $353.50/$355.50, off 50 cents from its New York close, while palladium was unchanged at $279.00/$294.00.
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