Gold futures finished at a record close on Friday, after earlier topping $US1,100 an ounce for the first time.
It was an historic week for the metal. Traders expect it to go back above $US1100 an ounce next week, especially if the US dollar continues to weaken.
That’s more than $A1200 an ounce.
Comex Gold for November delivery rose $US6.40, or 0.6%, to end at $US1,095.10 an ounce in New York, the highest closing level for the front futures contract. (More distant contracts have been higher.)
December gold earlier hit a record intraday high of $US1,101.90.
But industrial metals, such as copper, fell, down fractionally with the December contract closing at $US2.94 a pound as markets had a fret about the rise in the US unemployment rate to 10.2%.
Oil also fell in New York.
Helping drive gold higher over the week was the news that the Reserve Bank of India had bought 200 tonnes of gold from the International Monetary Fund, thereby cutting in half the 403 tonnes the Fund sells into the market over the next few years.
The central bank of Sri Lanka was also reported as saying it had been buying gold, but no quantities were given.
Besides the new demand, the news sparked talk that other central banks will follow:
China has already bought gold to lift its share of its huge reserves to around 3%.
India’s is not much at all, around 3.5% of its $US281 billion in reserves.
Bloomberg reported that one forecaster reckons gold will climb to $US1,350 an ounce and oil will top $US100 a barrel in the next six months.
It said that the forecast was from Richard Kang, chief investment officer with Emerging Global Advisors.
“Many investors, especially in the developed world, are underexposed to commodities from gold, metals to energy to agriculture,” Bloomberg reported Kang as saying.
“They are likely to move this up to somewhere between five to 10 percent of total portfolio holdings.”
“Fundamentals started it but now we’re into greater crowd psychology.
“We can see gold getting to $1,250 to $1,350 within six months time and if that happens then $2,000 is very possible. The same is with oil,” Bloomberg reported him as saying.
Gold, is up nearly a quarter so far this year and US share markets are up around 16%.
The Reuters/Jefferies CRB Index has jumped 21% so far in 2009, after falling 36% in 2008 (so it hasn’t regained all those huge losses from last year).
It soared to an all-time high of $1,097.72 yesterday. December-delivery gold added 0.2% to $1,089.10 an ounce on the New York Mercantile Exchange’s Comex division.
Oil is up 79% this year, hitting a 12 month high of $US82 a barrel late last month. That is still a long way from the all time high of just over $147 a barrel
Nymex oil December futures fell 0.6% to $79.92 a barrel on the New York Mercantile Exchange.
Bloomberg said Kang believes pension funds, hedge funds and other larger institutions will increasingly rely on emerging markets and commodities for both return enhancement and risk reduction.
“Investors realize that both traditional bond and stock holdings have limited value and cash earns nothing,” Kang said.
“Commodities and especially gold will be seen as a placeholder for cash. Simply replacing gold with the dollar.”
Gold may be up by nearly 25%, but silver is up 55.7%, platinum has risen 48.5% (thanks to the rebound in cars sales) and palladium is up 80%.
Oil fell nearly 3% to $77 a barrel in New York on Friday after the rise in the USD jobless figures.
Nymex oil futures closed down $US2.19 at $US77.43 a barrel. In London Brent crude fell $US2.12 to $US75.87 a barrel.
All the interest was in gold though and its and the approach to, over and the back under the record $US1100 an ounce level.
Comex copper futures for December delivery eased 0.2%, to $US2.9525 a pound on Friday to end down 0.1% for the week.
The fall reversed an earlier 1.6% rise in prices as the US dollar eased. The dollar bounced a bit after the jobless figures were analysed.
In London LME three month copper lost $US41 to $6,490 a tonne ($US2.94 a pound). LME aluminum, zinc, tin, nickel and lead also fell.
In China, copper stocks overseen by the Shanghai Futures exchange have not hit their highest level since 20004.
Stocks rose by 1,440 tonnes to 104,275 tonnes this week, based on a survey of five warehouses monitored by the exchange. This is the highest level since April 2004.
Stocks of aluminum also rose, as did zinc, support perhaps for the idea that China has finished restocking for the time being (as it does late in any year).
Chinese import figures for October this week will help give us an idea of the current state of demand in the world’s biggest consumer of metals and resources.
