Gold hits highest closing since '83
NEW YORK – Gold rose more than $7 Thursday, to $506.30 an ounce, the highest closing price in 22 years, on renewed purchases by investors seeking an alternative investment to stocks, bonds and currencies.
Gold may average $520 an ounce next year, UBS AG said, raising its estimate from $455. Demand for gold coins and bars and bullion-backed shares rose 56 percent in the third quarter from a year earlier, the World Gold Council said.
“We expect the gold price to be supported by a combination of fundamental supply and demand factors together with further growth in investment demand,” UBS said in a report.
Gold for February delivery rose $7.60, or 1.5 percent, to the highest closing price since Feb. 18, 1983, on the Comex division of the New York Mercantile Exchange. Gold has gained 16 percent this year as it heads for its fifth straight annual increase.
“There’s a long-term move up here, and investors are buying on dips,” said Marty McNeill, a trader at R.F. Lafferty & Co. in New York.
Global gold output had its biggest annual decline last year since the 1940s, according to London-based research group GFMS Ltd. Newmont Mining Corp., the biggest gold producer, and AngloGold Ashanti Ltd., the second largest, reported declines in third-quarter output.
Gold sold in dollars has gained in all major currencies this year, paced by a 35 percent rise in Japanese yen and a 33 percent gain in euros. Gold sold in euros rose Thursday even after the European Central Bank raised its benchmark rate to 2.25 percent from a six-decade low of 2 percent, the first increase since 2000.
Other metals have rallied this year. Copper has surged 38 percent, palladium by 45 percent, and zinc is up 42 percent.
“Gold is undervalued” compared with other metals, said John Licata, an independent analyst in New York. “I’ve had $510 circled on my chart as a key level that, if breached, could signify the explosive gold market has monster legs.”
(via Chicago Tribune)