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Gold hits 4-month high on Greece fears

GOLD hit a four-month high today, gaining momentum from the euro’s fall amid intensifying worries over Greece’s financial situation.

Gold for April delivery rose $US17.20, or 1.5 per cent, to $US1152.30 an ounce on the Comex division of the New York Mercantile Exchange. This is the highest settlement for a front-month gold contract since December 7.

June gold, currently the most actively traded contract, also rose 1.5 per cent and ended at $US1153 an ounce.

Over the past several years, the US dollar and gold have often moved in opposite directions. Recently, however, investors view gold increasingly as a hedge against depreciation not only of the US dollar, but of other currencies as well.

With the euro falling against the US dollar on continued worries on Greece’s ability to tap debt markets, gold priced in euros hit another record high at €863.38.

“It’s becoming a currency hedge for Europeans,” said a Canada-based gold trader, who spoke on the condition of anonymity because he wasn’t authorised to speak with the media.

KEY COMMODITY PRICES: oil, base metals, gold, silver, livestock and wheat

Currencies have whipsawed in past months on concerns that Greece may not be able to continue to refinance its debt and on uncertainty over whether other European nations would come to the rescue if needed. Greece said last night its 2009 deficit would be slightly deeper than forecast. The euro recently traded $US1.3353 from $US1.3406 yesterday.

“Assets like gold and the dollar as currency (havens) are bringing steady buying,” said George Gero, vice-president with RBC Capital Markets Global Futures.

“Momentum traders from funds are buyers.”

Gold has been hovering at about $US1100 an ounce for several weeks after backing off its record high of $US1226.40 in December. Indicators like higher moving averages and increasing open interest have caught the eyes of fund traders, Mr Gero said.

Some of the gains are also coming amid allocation of new money into gold as the second quarter begins, said Larry Young, senior portfolio manager at Covenant Trading.

“We’re in a really strong buy mode here,” Mr Young says.

Other precious metals also rose in New York.

Silver gained with gold prices. Comex May silver rose US26.8 cents, or 1.5 per cent, to settle at $US18.199 an ounce.

Platinum and palladium futures ended higher on continued bullish sentiment from recently robust auto sales figures, worries over electricity supply in producing country South Africa and optimism about the economic recovery. More than half of the demand for the metals comes from the auto industry for use in catalytic converters.

Nymex July platinum gained $US18.70, or 1.1 per cent, to settle at $US1723.20 an ounce while June palladium on the exchange rose $US3.85, or 0.8 per cent, to settle at $US512.35 an ounce…read more at The Australian