The Hindu Business Line : Gold surges to 6-year high

On Friday, as speculators took profits after the previous few day's strong gains, prices pulled back to $341.60/oz (London PM fix), showing 2.8 per cent gain week-on-week.

MUMBAI, Dec. 22

IN a week that witnessed enough excitement due to escalating geo-political and economic concerns, gold relentlessly surged upward to near 6-year high on Thursday, only to be pulled back the next day due to profit taking. Thus the metal ended 2002 at 1997 levels.

Beginning the week relatively quietly at around $333 an ounce, the yellow metal surged to a 5-1/2 year high of $341.70/oz on Tuesday with potential Iraqi war concerns in focus although concerns about the US dollar appeared to prompt actual buying. Wednesday was not much different.

Thursday was another huge day for gold reaching its highest level since early 1997 amid war concerns, while US dollar fell to a three-year low against the euro, plus the supportive move of oil above $30 a barrel. However, on Friday, as speculators took profits after the previous few day's strong gains, prices pulled back to $341.60/oz (London PM fix), showing 2.8 per cent gain week-on-week. The latest Comex commitment of traders report showed that the net long position in gold had jumped 57.2 tonnes to 159.7 tonnes as of December 10, the highest net long since February 5, 1996. Commenting on the price movement on the last trading day, Mr. Kamal Naqvi, analyst with Macquarie Research Equities said, ``With market volumes likely to be very thin over the next week or so during the Christmas and New Year period, speculators have clearly been keen to lock-in profits before trading becomes too illiquid''.

Silver struggled all the week to hold on to the positive influence of the gold market, but eased back during the week from $4.70/oz to $4.60/oz with disproportionately little follow through buying evidence. Official price on Friday was $4.67/oz (London AM fix), down 1.6 per cent week-on-week. Platinum struggled to break above $600/oz, suffering occasional bouts of long liquidation due to the approaching year-end. Platinum closed on Friday at $588/oz (down 2.3 per cent), while palladium ended at $226/oz, down 5.4 per cent.

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