Metals - Gold extends gains on dollar weakness, analysts call for push higher

Metals - Gold extends gains on dollar weakness, analysts call for push higher

	Published : Thu, 19 Jul 2007 15:15 By : Agencies Print this Story

LONDON (Thomson Financial) - Gold extended gains on dollar weakness which made the precious metal cheaper for foreign currency holders, with analysts now calling for another push higher ahead of more comments from the US Federal Reserve chairman.

At 2.50 pm, spot gold was trading at 674.25 usd an ounce, compared with 672.70 usd in late New York trade yesterday.

'Precious metals were firmer on the back of the weaker dollar with Bernanke in his testimony to Congress emphasising inflation still to watch for as he stuck to his hawkish bias,' said UBS analyst John Reade.

Yesterday, chairman Ben Bernanke's comments, which reiterated that inflationary pressures remain on the upside, sparked a gold price rally after the dollar weakened.

Bernanke continues his testimony this evening, but is not expected to say anything significantly different to yesterday.

Meanwhile, a raft of US economic data failed to move the dollar from near record lows against the euro, but traders will keep a close eye on the July Philadelphia Federal Reserve's index of manufacturing activity due later today.

Yesterday's mini rally to above 670 usd, a key psychological level has boosted sentiment, and now market calls for higher prices have returned.

'A strong close (today) should see resistance at 675 usd and 682 usd eyed. A breach of 682 usd will see the market thinking about breaking the 2007 693 usd highs once again,' said Reade at UBS.

Gold hit 693 usd in April.

High oil prices, with London's benchmark Brent contract trading less than 2 pct off an all-time high set last summer, also underpinned the metal. Some investors rush into the gold market when high energy prices stoke inflation jitters. With some analysts calling for Brent to go even higher, gold could follow its lead.

'The prospect of even higher oil prices is gold-friendly, in our view,' said HSBC analyst James Steel.

In other precious metals, silver was higher at 13.25 usd from 13.20 usd, palladium was up at 368 usd from 366 usd while platinum was flat at 1,320 usd.

anealla.safdar@thomson.com

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