Dented dollar pushes gold above $1,060

Robust US Manufacturing data helped hurt the dollar and push gold toward last months high

LONDON (Reuters) - 

Gold prices ran above $1,060 an ounce on Monday, closing in on last month's record high, as a robust reading of U.S. manufacturing data boosted risk appetite and dented the dollar -- polishing the metal's allure.

By 1600 GMT, spot gold stood at $1,061.40 per ounce up 1.62% and bringing the record high of $1,070.40 from October into view.

Data released earlier by the Institute for supply management showed the U.S. manufacturing sector grew in October for the third consecutive month and at a faster rate than was expected.

But gold had already started showing some signs of independent strength beforehand while currency markets were muted.

India's front-month gold future contract on the Multi Commodity Exchange of India Ltd (MCX) struck a record high of 16,099 rupees per 10 grams, while gold priced in euros also rallied strongly.

"The dollar helped today, but overall gold seems to have some strength on its own. There's still some room on the upside," said Alexander Zumpfe, precious metals trader at Heraeus.

The dollar fell almost 0.4% against a basket of major currencies .DXY and the euro was bid at $1.4821.

Last week gold registered its first weekly loss since the week of September 25, after dollar weakness had helped to spur four consecutive weeks of gains.

Analysts were broadly upbeat on the market's chances of eking out more gains due to expectations for more dollar weakness.

"On a relative basis the U.S. interest rates remain very low. Also, the Fed has been a lot more aggressive on quantitative easing than any other central bank, which is not good for dollar strength," said Walter de Wet, analyst at Standard Bank in London.

U.S. gold futures for December delivery stood at $1,059.70 an ounce, up $19.10 from Friday when the contract fell $6.70 to $1,040.40 on the COMEX division of the New York Mercantile Exchange.

ANGLOGOLD LOWERS OUTPUT TARGET

AngloGold Ashanti (ANGJ.J: Quote, Profile, Research), the world's No.3 gold producer, lowered its annual production target for the second straight quarter after suspending output at a South African mine for safety checks.

In a separate interview with Reuters at the London Bullion Market Association conference, Anglo said it may accelerate closing its hedgebook if conditions are right.

African miner Randgold Resources (RRS.L: Quote, Profile, Research) and AngloGold Ashanti said they agreed to buy an additional 20 percent in the Moto gold project in the mineral-rich Democratic Republic of Congo for about $113.6 million.

The world' largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 0.915 tonnes on Friday, making the total weekly decline to 4.575 tonnes.

Analysts said physical buying of gold was holding up, supporting bullion prices.

"On the downside it seems well protected," Standard Bank's de Wet said. "We're seeing good physical buying. When gold goes below $1,040 there's some good interest which is supporting the price."

In other precious metals, silver rose in league with gold to trade at $16.54 from $16.27 late on Friday in New York. Platinum was at $1,329 from $1,322.50 and palladium was at $323.50 from $318.50.

(Editing by Sue Thomas)

© Thomson Reuters 2009 All rights reserved

Disclaimer

MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

Print story      Email story      Subscribe to free newsletter

Back