Skip to main content

A labourer works on the gold bars which are going to be melted in a smelter at a plant of gold refiner in Istanbul

OSMAN ORSAL

Gold fell from a record high hit earlier on Thursday as the dollar rebounded from its lows, but the market was still expected to seek higher ground due to prospects for central bank buying and further dollar weakness.

Spot gold hit a record high of $1,194.90, but had retreated to $1,182.70 an ounce by 1023 GMT versus its last quote of $1,190.30 in New York late on Wednesday.

"The sentiment towards gold is still very positive," said Suki Cooper, analyst at Barclays Capital. She cautioned however that prices could be subject to a short term correction.

Story continues below advertisement

Bullion has gained more than 37 per cent this year - including a 13-per-cent rise in November alone on dollar weakness, expectations of further reserve diversification by central banks and fears of inflation next year.

Late on Wednesday, the International Monetary Fund said it had sold 10 tonnes of gold to the Central Bank of Sri Lanka, a part of the 403.3 tonnes approved for sale by the fund's executive board in September. The fund has already sold 202 tonnes to the central banks of India and Mauritius.

The dollar recovered some poise after hitting a 14-year low against the yen as traders betting against the U.S. currency cashed in on its recent slide. Against a basket of currencies, the U.S. currency was up by 0.37 per cent.

U.S. December gold futures also rose to a fresh high of $1,195.00 per ounce. Futures were last at $1,182.60 an ounce, compared with $1,187.00 on the COMEX division of the New York Mercantile Exchange.

Gold has soared to new highs five times in the last ten trading sessions, and three times this week.

Traders said Dubai's move to restructure its biggest corporate debtor, Dubai World and delay on some of the company's $59-billion of liabilities had an indirect impact on gold as it moved the dollar.

Central Banks, particularly in Asia, increasingly looking to diversify their foreign exchange reserves after India's purchase of 200 tonnes earlier this month is a major factor buoying the yellow metal.

Story continues below advertisement

"Everybody is bullish on gold, and everybody is looking at the signal central banks are sending," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.

"It's not just India or China ... everybody is looking at how much money they will invest in gold," he said.

Any decision on whether India would buy more gold from the IMF would be taken by the Reserve Bank of India, Indian finance ministry official Anup Pujari, joint secretary for multilateral institutions, told Reuters on Thursday.

Mr. Poon said there was a lot of physical demand despite high prices, with Asian buyers seen in the market.

"Reserve diversification moves by non-G7 central banks underscore investor detachment from U.S. dollar assets and is clearly reflected in gold's rally," said Shuji Sugata, a manager at Mitsubishi Corp Futures research team.

U.S. markets will be closed on Thursday for the Thanksgiving holiday. Traders said volume was not large, with many players kept to the sidelines due to the Thanksgiving holiday.

Story continues below advertisement

Gold's rally pulled other precious metals higher, with platinum rising as high as $1,480.00 per ounce, its highest since late August, 2008.

Silver was at $18.42 an ounce versus $18.82 an ounce while palladium was at $367.50 an ounce versus $370 an ounce on Wednesday.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies