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Gold hits 28-year peak, platinum sets record

LONDON - A sickly dollar and firming oil prices swept gold to 28-year highs on Thursday, while platinum was set in London at a record high of $1,396 per ounce aided by rising bullion prices and worries over supply.

Dealers and analysts said that fund buyers, seeking safe stores for their cash due to continuing unease over problems in credit markets, had the bit between their teeth and would eventually targeting a record high above $800.

“Gold is getting closer to the pivotal point at $750 per ounce, which it is likely to test in the short term if the stimulating impetus from the dollar and strong oil prices persists,” said Alexander Zumpfe, trader at Heraeus Precious Metals.

By 1050 GMT, spot gold had hit $747.70 per troy ounce -- it’s highest since January 1980 -- before pulling back marginally to trade at $747.00/747.80, up from $738.80/739.60, quoted late in New York on Wednesday.

Spot platinum rose to match a record hit in November 2006 at $1,395 per ounce. The metal was set, or “fixed,” in London earlier at a record $1,396 and was last trading at $1,395.00/1,399.00, up from $1,381/1,388 in New York on Wednesday.

Dealers cited worries over supply in South Africa due to power outages, and rising rates of interest charged on borrowing the metal.

South Africa’s Anglo Platinum, the world’s biggest producer, said that two of its smelters were affected by power outages.

Analysts said the metal, used in jewellery and car production, was well positioned for further gains with support from the supply /demand outlook and fund interest.

“We continue to believe that platinum is a relatively safe place to hold precious metals exposure; any liquidation in gold will tug platinum lower but positioning is less extreme in platinum compared to gold and supply & demand fundamentals superior,” UBS said in a note to clients.

The bank added however that current high price levels made it hard for potential investors to put on fresh long positions.

Momentum builds

The dollar resumed its losing streak versus the euro and yen, with the greenback weighed by expectations for the US Federal Reserve to cut rates again after it slashed borrowing costs by 50 basis points in September.

Analysts saw a poor trajectory for the dollar benefiting gold further as a weak US currency makes gold and other dollar-priced metals cheaper for non-US investors.

Bullion was also reaping benefits from rising oil prices that boosted its role as a hedge against oil-led inflation.

US crude was trading at around $81.95, after gaining $1.04 on Wednesday.

“We still expect gold to challenge the $800/oz level before year-end as investors continue factoring safe-haven assets into their portfolios, with an initial target of $765,” James Moore, analyst at TheBullionDesk.com, said in a note to clients.

On the supply front, South African gold output fell 4.9 percent in volume terms and overall minerals production fell 3.1 percent in August compared with the same month the previous year, official data showed.

In other bullion markets, COMEX futures rose with the most active December contract at $752.70 an ounce, up 0.9 percent from the New York settlement.

The benchmark August 2008 gold contract on the Tokyo Commodity Exchange finished up 14 yen or 0.5 percent at the day’s peak of 2,836 yen, the highest for any TOCOM gold benchmark since March 1985.

The key August TOCOM platinum contract finished up 47 yen, or 0.9 percent, at 5,169 yen per gram.

Palladium rose on the back of firming gold and platinum prices to $380/3383 an ounce from $372.50/376.50 in New York. Silver also rose to $13.67/13.72 an ounce from $13.53/13.58 late in New York.