Gold finds support from rising oil prices, reserve diversification |
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Published
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Wed, 31 Jan 2007 18:45
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LONDON (AFX) - Gold rallied towards 655 usd in line with rising oil prices and on speculation that the metal will become more popular way of holding reserves.At 5.24 pm, spot gold was quoted at 652.50 usd an ounce, up from 644.60 usd in late New York trade yesterday.Nick Moore at ABN Amro noted that gold is benefiting from the recovery in oil prices.Additionally, there is some sense that gold may well turn out to be the next metal to enjoy a good run.Tom Hartmann, trader at Altavest, meanwhile noted gold's rising popularity as a way to hold reserves.'Gold is becoming favourable again as a reserve holding. Gold will outlast any currency. So despite the value of the dollar rebounding, gold prices are holding steady and are likely to move higher as the likes of China, Russia, South Africa for example try to own more gold and diversify away from the US dollar,' he said.On the other hand, investors remain cautious ahead of the US rate decision and accompanying statement later today. In particular, investors are worried that US rate setters may warn about inflationary pressures ahead. While a higher dollar may weigh on gold prices, the threat of inflation may well add to gold's appeal as a hedge against higher prices.The interest rate decision itself is likely to be a non-event, with no change from the current 5.25 pct rate widely expected.anealla.safdar@thomson.comas/asCOPYRIGHTCopyright AFX News Limited 2006. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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Metals - Gold steady as traders await Fed rate decision 