Business-Insider

LONDON (Thomson Financial) - Gold rose and was steady above 800 usd as dollar weakness and high oil prices spurred buying, although trade was thin as a result of the US Thanksgiving holiday.

Weak equity markets, after US shares slid yesterday, and the growing perception that the world's economy will not escape a serious slowdown next year sparked some gold-buying as the precious metal is seen as a safe haven.

Players like to put their money somewhere safe and into a less risky asset in times of turmoil.

'Gold's pre-eminent allure was demonstrated on Wednesday as it was the only metal, base or precious, to finish in positive territory,' said UBS analyst Robin Bhar.

At 12.38 pm, spot gold was trading up at 802.70 usd per ounce against 798.10 usd in late New York trade yesterday.

Weakness in the greenback, which hit yet another record low against the euro earlier today, spurred buying from those trading in other currencies because they found dollar-denominated gold to be cheaper.

Meanwhile, higher oil prices, which stayed close to a record high of 99.29 usd struck yesterday, sparked inflation jitters -- to which gold is often bought as a hedge.

Gold has risen some 30 pct since the start of this year and surpassed analysts' expectations who had previously seen 750 usd an ounce as the key price milestone.

The precious metal hit 845.58 usd per ounce earlier this month -- less than 5 usd lower than its all time peak in January 1980 of 850 usd.

Dollar weakness, sky high oil prices and ongoing market-turmoil are likely to continue and players reckon these factors are likely to support gold going ahead.

In late October, Credit Suisse said gold could fetch over 1,000 usd per ounce by 2010, and will average 838 usd next year on account of global economic worries.

Other banks' views are not far off either. Gold will race past its record high by early next year on dollar weakness and as the precious metal's safe-haven quality is likely to boost buying, said RBC Capital Markets earlier this month. In the first quarter of 2008, RBC expects gold to rally to as high as 900 usd per ounce.

JP Morgan analyst Michael Jansen said precious metals are likely to draw support 'as long as a) the USD remains weak, b) crude oil remains strong and c) investors continue to look to hold precious metals as a hedge.'

The only way gold might fall is if and when players sell off their holdings in a bid to raise cash to cover losses elsewhere.

In other precious metals, platinum was up at 1,464 usd per ounce from 1,458 usd.

Silver was up at 14.49 usd per ounce against 14.42 usd late in New York yesterday, while palladium dipped to 353 usd per ounce against 355 usd.


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