Gold at 16 month high

Gold edged up today and held within sight of a 16-month high hit last week as its status as a safe investment came under the spotlight amid a sell-off in stocks, but a firmer yen put pressure on Tokyo futures.

Spot gold was at $700.50/701.30 an ounce as of 0307 GMT, edging up from $699.90/700.70 late in New York on Friday, when it rallied to its highest since mid-May 2006 at $707.10.

Capital inflows continued into gold-backed exchange traded funds (ETFs) listed overseas despite a slump on Wall Street after surprisingly bleak US jobs data, underlining investor confidence in bullion.

Analysts said the data worsened prospects for the dollar and encouraged bullion buying. A lower dollar makes gold, which is denominated in the U.S. currency, cheaper for investors holding the euro and other foreign currencies.
“Investors are getting more confident that bullion has hit a floor and is on the way back up,” said Yuki Sonoda, advisor at Daiichi Commodities Co Ltd.
“Finally, a gleam is in sight,” he said, adding that an increased amount of gold held by

ETFs showed steady appetite for gold by pension funds and other long-term investors.
The latest data showed gold held in New York-listed StreetTRACKS Gold Shares NYS, the world’s largest gold-backed ETF, rose to 549.42 tonnes, another record high, up 33.98 tonnes or 6.6 percent from the start of the month.

But yen-denominated gold futures on the Tokyo Commodity Exchange came under pressure from a weakening dollar versus the yen.

A higher yen deflates yen-based gold futures, encouraging domestic players who had bought to unwind long positions.

The benchmark August 2008 gold futures fell 19 yen per gram, or 0.7 percent, to 2,574 yen.

The dollar slid to a 15-year low against a basket of major currencies on Monday as Friday’s data showing companies cut 4,000 jobs last month, the first such decline since August 2003, prompted investors to expect a hefty Federal Reserve rate cut next week to protect the economy from the housing market crisis.

Against the yen, it fell 0.4 percent from late U.S. trade to 112.95 yen sliding back towards a 14-month low of 111.60 yen. The euro edged up to $1.3775 jumping back near a high of $1.3853 hit in July -- the highest since the single currency was first launched in 1999.

Platinum rose to $1,292.50/1,297.50 an ounce from $1,286.10/1,293.10 late in New York. It hit an intraday high of $1,295 an ounce on Monday -- its highest in five weeks.

The market received support from news on Friday that a South African labour union had called off a strike by some 1,500 workers at a smelter and two refining operation of Anglo Platinum , the world’s biggest platinum producer.

Palladium inched up to $333/338 an ounce from $332.50/336.70 an ounce.
Silver inched down to $12.50/12.54 ounce from $12.51/12.54 an ounce late in New York on Friday, when it rose to its highest in more than three weeks at $12.67. Precious metals prices at 0322 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 700.40 0.20 +0.03 10.18 Spot Silver 12.50 -0.10 -0.79 -2.72 Spot Platinum 1292.50 3.00 +0.23 14.18 Spot Palladium 333.00 -1.30 -0.39 0.30 TOCOM Gold 2574.00 -19.00 -0.73 5.28 56423 TOCOM Platinum 4694.00 -46.00 -0.97 10.34 16455 TOCOM Silver 457.40 -4.90 -1.06 -7.28 1111 TOCOM Palladium 1240.00 -23.00 -1.82 -1.20 109 Euro/Dollar 1.3769 Dollar/Yen 112.95 TOCOM prices in yen per gram, except for silver which is in yen per 10 grams, spot prices in $ per ounce.

Via Mint