Demand in Asia has gold prices soaring
Gold prices broke through the critical threshold of $500 an ounce in Asian trading Tuesday for the first time since late 1987, driven by...
By The Associated Press
TOKYO — Gold prices broke through the critical threshold of $500 an ounce in Asian trading Tuesday for the first time since late 1987, driven by investor demand for the metal as a diversifying asset. Prices retreated in later trading.
A fourth consecutive day of strong Japanese buying sent gold above the milestone, traders said, bringing the metal's gains to 10 percent in less than four weeks.
Spot gold rose as high as $502.80 per troy ounce in intraday trading before slipping back to settle at $499.20 in New York trading.
December gold futures settled on the New York Mercantile Exchange at $499.10 an ounce, up 80 cents from the previous day.
Gold's appeal as a hedge against currency weakness, inflation and financial instabilities in general has driven the recent rise in prices, traders said.
Japanese buyers are apparently being encouraged by strong technical trends and possibly concerns about further yen weakness, Barclays Capital said in a report.
Recent reports that Russia wants to buy more gold in a bid to diversify its foreign reserves also helped push gold higher, Tokyo traders said.
Opinion is divided on gold's next move, but there is general agreement that the market could see further gains in the long run.
Some participants expect to see profit-taking in a technically overbought market, while others say sentiment seems strong enough to lift prices higher.
"It's difficult to say now. The market expected some selling around this level, but the Japanese just keep on buying," said Ellison Chu, senior manager at Standard Bank London's Hong Kong office.
Chu and other traders in Asia expect spot prices to "shuffle along" between current levels of $495 to $502 in upcoming sessions in preparation for a run toward the next major upside target at $520 to $530 an ounce.