at seven-month high, up 3% on flight to safety
Copper contract plunges amid
macro-level demand worries By Moming Zhou & Chris Oliver,
Last update: 11:51 a.m. EST Feb. 17, 2009
YORK (MarketWatch) -- Gold futures breached $970 an ounce
Tuesday, rising to the highest level in seven months as investors
seeking a safe haven against economic troubles bought into
Heightened risk aversion also pushed up the
U.S. dollar and Treasury prices, while oil futures and global
stock markets skidded. Safe-haven buying raised holdings in
the largest gold exchange-traded fund to a new record high
near 1,000 tons, according to latest data.
Gold for February delivery rose $28.80, or
3.1%, to $970.30 an ounce on the Comex division of the New
York Mercantile Exchange, the loftiest level for a front-month
contract since July.
onday's gain followed on gold's 3% increase
last week. The metal is now just about $33 below its record
high above $1,003 an ounce set in March 2008.
Meanwhile, the April gold contract traded
more actively, hitting $972 an ounce, up 3%.
"I think $1,000 is pretty much almost
in the cards here just given how strong the trend has been,"
said Brian Hicks, co-manager of the U.S. Global Investors
Global Resources Fund.
The strong demand for gold is "a reflection
of just how concerned investors are becoming about the ongoing
volatility in the equity market as well as the financial crisis,"
Gold holdings in SPDR Gold Shares, the largest
gold exchange-traded fund, rose 1.6% from a day ago to 985.86
tons on Friday, according to latest data. That's up more than
180 tons from a month ago.
The SPDR Gold Trust (GLD
95.63, +3.08, +3.3%) added 3% to $95.33.
In spot trading, the London afternoon gold-fixing
price -- a benchmark for gold traded directly between big
institutions -- stood at $968 an ounce Tuesday, up $25.50
from the previous day.
In other metals trading, March copper tumbled
7.4% to $1.425 a pound, while March silver rose 3.6% $14.11
an ounce. March palladium added 1.2% to $219 an ounce, and
the April contract for sister metal platinum rose 2.9% to
$1,091.70 an ounce.
U.S. stocks slumped Tuesday, with the Dow Jones Industrial
Average down more than 250 points. Asia and Europe shares
also moved lower, with the banking sector sliding on concerns
the global economic crisis is deepening.
Moody's Investors Service flagged concerns about European
banks' exposure to Eastern European economies.
"Gold is moving as the last phase of the crisis appears
to have started," said Martin Hennecke, associate director
with Tyche Group in Hong Kong.
Gold prices, which tend to move in opposite directions to
the U.S. dollar, have moved in tandem with the greenback recently,
as risk aversion lifted both the dollar and gold. The dollar
index (DXY: 87.77, +1.11, +1.3%) , which tracks the value
of the greenback against its major rivals, rose 0.4% to 87.515.
(GFI: 12.07, +0.90, +8.1%) rose 2.3% to $11.43.
In equities, shares of Barrick Gold Corp. (ABX: 38.81, +0.87,
+2.3%) , the world's largest gold-mining company, gained 1.6%
to $38.58, while Goldcorp Inc. (GG: 32.73, +0.98, +3.1%) added
2% to $32.35 and South Africa's Gold Fields Ltd.
The Amex Gold Bugs Index (HUI: 327.31, +16.15, +5.2%) , which
tracks the share prices of major gold companies, added 2.5%
The iShares Gold Trust ETF (IAU: 95.75, +3.14, +3.4%) also
rallied, up 3.1% to $95.43, while the iShares Silver Trust
ETF (SLV: 14.02, +0.48, +3.5%) rose 2.4% to $13.87
Moming Zhou is a MarketWatch reporter based in New York.
Chris Oliver is MarketWatch's Asia bureau chief, based in