MarketWatch
Gold futures tap $600 an ounce; silver tops $12
Thursday April 6, 10:30 am ET
By Myra P. Saefong
SAN FRANCISCO (MarketWatch) -- Gold futures tapped $600 an ounce Thursday morning for the first time since January 1981, pulling other metals to multiyear pinnacles and delivering copper to a new all-time high.
"Gold is exploding, and silver isn't far behind," said Kevin Kerr, trader and editor of Global Resources Trader, a newsletter service by MarketWatch, the publisher of this report.
Gold for June delivery rose to $600 an ounce in regular trading on the New York Mercantile Exchange, having hit a high of $601.90 overnight. The contract was last traded at $597, up $5.30.
May silver also traded at a new 22-year high of $12.01 an ounce, after peaking at $12.08 overnight. The contract was last up 22.5 cents at $11.93.
"Key resistance was broken overnight and, as we have been building support and healthy consolidation over the last week or so, now we have a firm base to move higher," said Kerr, who noted that Thursday's early rally has come without any real news to drive it.
But Jon Nadler, an investment products analyst at bullion dealers Kitco.com said he thinks it is "reasonable to conclude that [Secretary of State Condoleezza] Rice's call for sanctions on Iran and the car bombing in Iraq are weighing on trader's minds."
Analysts at Action Economics said metals are finding strong support from continued buying by funds, seeking out asset classes with a potential for strong returns.
"The latest bout of [U.S. dollar] weakness has been a factor, though the euro price of gold also rallied today," the Action Economics analysts said.
Now that gold has hit the psychologically key $600-an-ounce level, some nearer-horizon funds may take the opportunity to lock in profits, they said.
"Going forward, inflationary concerns will only gain steam, the U.S. dollar will continue its downward decline and geopolitical tensions will continue to draw safe-haven buying from around the globe," said Emanuel Balarie, senior market strategist at Wisdom Financial.
Caution ahead
On the other hand, the break through $600 may also trigger a range of stops and key hedge-fund buy levels, said Kerr."Trading in the pits will be volatile today, to say the least, as traders and fund managers scramble for cover, at least those who are short," he said. "Those who are long will be scrambling to buy whatever they can to add to their winning positions."
After the $600-$625 level, "there may be a consolidation, perhaps back to $575," warned Peter Spina, an analyst at GoldSeek.com.
Then from here, "it is $650-700, ultimately," he said, with $690-700 possibly the next upside target. "Then it's onwards to over $800 ($825-875)."
Silver's strength
Meanwhile, silver has rallied sharply in recent weeks as excitement has built about the pending launch of a silver exchange-traded fund that's expected to boost physical demand for the metal. See Mutual Funds/ETFs section.Silver may see a correction that brings "$10 back, but then we look for $15 followed by $20-25, which is likely a year or so off," said Spina.
Gains in the precious metals, as well as expectations for stronger demand against a backdrop of economic strength worldwide, lifted copper futures to another record Thursday.
May copper was last up 2.5 cents to $2.621 a pound, after changing hands at a new record of $2.626 in official trade and $2.64 a pound in electronic trade.
July platinum rose $14.40 to $1,095 an ounce. June palladium was up $14.85 at $357.50 an ounce after a $361.75 high, a level the futures market hasn't seen since mid-2002.
On the supply side, inventories of copper were down 194 short tons as of late Wednesday, according to Nymex data. See data on basic-materials sector.
Supplies of gold were unchanged at 7.57 million troy ounces, and silver supplies were unchanged at 125 million troy ounces.
Amex Gold Bugs Index hits a record
Meanwhile, indexes tracking stocks in the metals-mining sector moved higher Thursday, on track to mark a fourth straight winning session.The Amex Gold Bugs Index rose to an all-time high of 354.32. It was last up 1.5% to trade at 353.25.
"The move on the HUI today above 350 is significant as it portends the move in gold to and past $600," said Spina.
"The key for today is to close above 350 on the HUI and all indications are that it will accomplish this unless we have a significant pullback in the gold price," he said.
Other benchmarks traded at their highest levels in at least two months. The Philadelphia Gold and Silver Index climbed to 148.4, trading up 1%, and the CBOE Gold Index (CBOE:^GOX - News) added 1.1% to stand at 149.2.
