Gold could reach $800 an ounce

Business Materials 17 October 2007 08:30 (UTC +04:00)

Gold hit a 28-year high yesterday, underpinned by record-high oil prices and geo-political tension that raised the precious metal's profile.

Prices later slipped as profit-taking set in, with the dollar's slight gains versus the euro making bullion dearer for holders of other currencies.

But having surged past $760 an ounce, some dealers have said the market is well positioned in coming sessions to close in on the $800 mark last seen in 1980 when bullion hit a record $850.

Support was seen coming from further dollar weakness and strength in crude prices that would highlight gold as a hedge against oil-led inflation.

"Anything is possible. We've certainly broken out and we're sort of in uncharted waters as we haven't been here in so long," said David Holmes, director of precious metals sales at Dresdner Kleinwort.

"The big theme of the market is that it's been very difficult to predict the high and everybody is being cautious as they know the market is long, but the momentum is still upwards," he added.

By 1420 GMT, gold was trading at $756.65/$757.35 per troy ounce, against $758.20/$759.00 late in New York on Monday, having hit a 28-year peak at $766.60 earlier.

Both oil and gold were also drawing support from tension in northern Iraq. The Turkish cabinet asked parliament on Monday for permission to launch an attack.

In other bullion markets, benchmark Tocom gold futures closed up 25 yen or 0.9 per cent at the day's peak at 2,907 yen a gram, the highest since October 1984.

US Comex gold futures eased, with the most active December contract down $0.8 an ounce at $761.40. ( Reuters )