-->Gold's manic Monday

By: Daniel Thole

"The trader said 2004 may be shaping up to be a big year after comments by the Russian and Chinese central banks that they wish to increase the proportion of their reserves held in bullion. “The dollar’s weakness means that Central Banks may be more inclined to hold gold as a reserve asset,” he said."



Posted: 2004/01/05 Mon 17:52 ZE2 | © Mineweb 1997-2004


JOHANNESBURG - Gold burst through the vital $420/oz level today, piggybacking on the dollar’s weakness and entrenching its position around fourteen year highs.
The dollar remained mired in weakness after comments from the US Federal Reserve indicated that US interest rates were likely to remain at current levels in the short term. The dollar sank as low as $1,2695 to the euro this afternoon, building on its breach through the key $1,25 level on Friday. That sent gold to levels as strong as $422,70, the metal’s highest level since February 1990.

A gold trader at a major South African bank said that gold had breached a key psychological level by breaking though $420/oz. “That was a big break - the next level we are targetting is $425/oz,” he said. “The market is extremely euro sensitive at the moment, yesterday’s comments put a spark in the market,” the trader said.

He said the effect of the dollar’s weakness had been compounded by renewed fears that the SARS virus was returning, and that terror could make a comeback this year. “The market is nervous, volumes are thin and gold is moving is on very thin volumes in the euro market,” he said.

He said the market was in unknown territory with the euro at these levels, and was testing the single currency by pushing it higher. “There are players in the market who keep calling for a pullback in the euro, but it just keeps testing new highs,” he said.

The trader said that because trade was still thin, gold’s gains had come in conditions which were not necessarily reflective of the market’s views on gold.

The trader said 2004 may be shaping up to be a big year after comments by the Russian and Chinese central banks that they wish to increase the proportion of their reserves held in bullion. “The dollar’s weakness means that Central Banks may be more inclined to hold gold as a reserve asset,” he said.

“Gold was the best performing asset class in 2003, and the speculation around renewal of the Washington Agreement, which is scheduled to take place this year, should also be good for gold,” he said. This year will see Central Banks again committing to the agreement, which limits the amount of gold that they can sell within a stipulated time period.

"als kleine Zugabe zum heutigen Forums-Plus- und -Kontra i.S. Zentralbanken-
Gold"


Emerald.