Gold continues to trade above $700

Gold continues to trade above $700

	Published : Wed, 10 May 2006 10:40 By : Phil Bateman Print this Story

HONG KONG - Gold prices continued to remain above $700 an ounce in Asian markets Wednesday even as the dollar weakened and fears over the Iranian confrontation with the West gained credence. Gold futures had broken the $700 an ounce barrier Tuesday and had registered what was a 25-year-high and this trend spilled over to Wednesday as well.

Analysts expect that the gold prices will consolidate at this level before jumping sup again. Bernard Hunter of ScotiaMocatta said that the jump in gold prices above $700 "is important, insofar as it reinforces the overall uptrend of the market. There are people looking for much, much higher."

He added that most market watchers are expecting gold to top $1,000-an-ounce mark.
If gold prices continue their bull run then it is likely that they will near the all-time record of $875 an ounce, which was set in January 1980. However after that Gold prices dipped below $700 in the blink of an eye. Peter Grandich, who publishes a letter on mining and metals, said that at the moment "all the lights look green for gold…. From this point forward, after the excitement, we could see a correction. But it will only be a correction. It will not be the end of this run."

Dealers in Hong Kong say that the volatility means that dealers are looking to make a quick buck, "We've been talking about China increasing its reserves for half a year and I doubt it that it's going to happen. People made use of this to push up the price last night," said a dealer in Hong Kong. "The market is still in the upward trend but people are cautious. There's some physical selling around 700 dollars." Even the dollar has weakened on the prospect of a halt in the interest rate hikes by the Federal Reserve.

James Thurtell of the Commonwealth Bank of Australia says that the gold prices are only bound to rise higher given the current political situation, "I think it could get to $800 by the end of this year," he said. "Concerns about the whole Iran-U.S. problem and potential conflict there and/or lower supplies of oil out of Iran if it has sanctions imposed on it."