Gold Rises to 1-Week High

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"Metals prices are being led higher by copper this morning. . ."

Gold rose to a 1-week high on Monday on bargain hunting driven by a firmer euro, while sterling-priced bullion struck another record as the British currency tumbled against the U.S. dollar.

Silver jumped to its strongest in almost a month to track gold and the price of copper, which surged on worries about supply after an 8.8-magnitude quake hit top producer Chile.

Spot gold XAU= hit an intraday high of $1,119.50/oz. and stood at $1,116.20 by 0255 GMT, steady with New York's notional close on Friday. Bullion was 7% below a lifetime high around $1,200 hit in early December.

Gold, which gained 2% in February on economic uncertainties and signs that U.S. interest rates would stay low in the near term, has yet to breach the 75-day moving average around $1,121 to sustain the uptrend.

"I think gold is being supported by strength in the broader commodities complex. Metals prices are being led higher by copper this morning following the earthquake in Chile and oil is back above $80 a barrel," said David Barclay, commodity strategist at Standard Chartered.

"We recently raised our Q2 forecast for gold to $1,100 an ounce and are still looking for a $1,300 an ounce average by Q4-2010," he added.

Sterling-priced gold hit record highs above 738 pounds XAUGBP=R after the British currency tumbled to a nine-month low against the dollar on growing political uncertainty as an opinion poll pointed to the risk the country's next election would result in a hung parliament.

U.S. gold futures for April delivery GCJ0 hit an intraday high of $1,120.7 an ounce, its strongest since Feb. 23, partly driven by firm oil prices.

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