Gold rose above $700 in London for the first
Gold rose above $700 in London for the first time since May 2006 on signs turmoil in credit markets is increasing demand for the safety of the metal. Silver also gained.
Gold was set for its biggest weekly advance in more than 10 months after investment in StreetTracks Gold Trust, the biggest exchange-traded fund backed by the metal, rose to a record. The dollar slid against all but one of the 10 most active currencies this week as the credit rout spread.
``This is not a flight from the U.S. dollar but from currencies generally,'' Dennis Gartman, trader and editor of the Virginia-based Gartman Letter, wrote in his daily report today. ``Gold has broken out'' to higher levels.
Prices for immediate delivery rose $4.01, or 0.6 percent, to $699.41 an ounce by 1:15 p.m. in London, after reaching $700.08, the highest since mid-May 2006. It gained $26.02, or 3.9 percent, this week, the biggest advance since the five days ended Nov. 3. Silver added 19.49 cents, or 1.6 percent, to $12.59 an ounce.
Gold sold in euros has climbed 5.9 percent this year and the price of gold traded in dollars is up 9.8 percent. New York futures yesterday gained above $700 for the first time in almost 16 months.
``Gold prices have benefited recently from the weakening dollar and we don't think that's going to extend further,'' said Tobias Merath, an analyst at Credit Suisse Group in Zurich.
Jewelers, the biggest buyers, ``have been important to the overall move higher and will have backed off for now,'' Michael Jansen, an analyst at JPMorgan Securities Ltd. in London, wrote in a report published today. ``The market could retreat toward $670 an ounce.''
Swiss bullion holdings fell to 30.94 billion Swiss francs ($25.8 billion) in August, from 31.8 billion francs a month earlier, according to figures on the Web site of the Swiss Federal Statistical Office in Neuchatel.
The 10:30 a.m. London fixing rate used by some mining companies to price sales of the metal gained $11.50 to $695 an ounce.