NEW YORK – Gold futures in New York reached a new 25-year high Friday, joined by other precious and base metals as a weaker dollar kindled speculation about still more gains in a shortened pre-holiday session.
Platinum reached a new 26-year high, boosted by investment fund buying, strong consumer demand and gold's strength, while copper stretched its rally to another high for benchmark futures.
U.S. exchanges will be closed on Monday, Jan. 16, to commemorate the birth of Martin Luther King Jr. Trading will resume Tuesday.
At the New York Mercantile Exchange's COMEX division, February delivery gold jumped $7.7, or 1.4 percent, to $557 an ounce, trading to $558.80, which was the loftiest for benchmark futures since January 1981.
A flurry of pre-weekend buying after the London afternoon bullion fix helped awaken the previously sleepy market. Futures managed to surpass Tuesday's quarter-century peak at $553.10.
A fall in the dollar Friday made gold look cheaper to overseas investors. Traders questioned how much further the Federal Reserve will raise U.S. interest rates, after U.S. retail sales were reported weaker than expected in December, but were revised up for November, while the Producer Price Index was higher than forecast, but below expectations once food and energy prices were subtracted.
With central banks considering increasing gold reserves, the economy of largest gold consumer India expanding and mining companies slow to discover rich new reserves, demand for gold looks robust going forward and supply limited.
"Having cleared the $550 level, gold now looks set to target $565 ...," James Moore at TheBullionDesk.com said in a market update.
Deutsche Bank, meanwhile, raised its gold price forecast by 16 percent to $570 an ounce for 2006 and by 26 percent to $660 for 2007.
NYMEX April platinum futures surged $13.60, or 1.3 percent, to end at $1,043.60 an ounce, after trading as high as $1,044.40, a price last seen in March 1980.
COMEX March copper gained 2.50 cents to finish at $2.1125 a lb, reaching as high as $2.1205 per lb.
Buyers stocked up on the red metal after it declined following the release of the disappointing economic headlines.
In Chile, a nine-day strike by contractual workers continued at Codelco on Friday, but top executives at the world's largest producer said it has not affected production from the largest copper mining company.
The New York Board of Trade's March arabica contract gained 2.40 cents, or 2.04 percent, to finish the day at $1.1995 per lb, after dealing from $1.1720 to $1.2050. On Tuesday, the benchmark futures reached a near seven-month high at $1.2160.
Some of the professional buying was position-adjusting related to the expiration of February options at the close of trade. Option owners tried to push futures into the money so their holdings would expire in the money, but faced resistance from the desks that held the other side of the trades.
"The $1.20 strike level was a bit more neutral than the $1.15, so they pretty much pushed the market to settle as near as they could to the strike to protect themselves," one floor trader said.