Thursday, Oct 30, 2008
Gold rose for a fourth straight day to near a 1-week high on Thursday on safe-haven buying after oil extended gains and the U.S. dollar posted its biggest one-day drop in 23 years.
Firmer equities also lifted gold and other precious metals, with silver and palladium rising to their highest in two weeks and platinum hitting a 1-week high. The U.S. Federal Reserve cut interest rates by half a percentage point on Wednesday, sending the U.S. dollar tumbling.
Thursday’s third-quarter U.S. GDP data, expected to show the economy contracted by 0.5 percent, could also set the direction for precious metals.
Gold was trading at $765.50 an ounce, up $11.20 an ounce from New York’s notional close on Wednesday, when it hit an intraday high of $773.40 an ounce.
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But is still down nearly 12 percent since the start of the month, on track for its biggest monthly decline since 1983, as an earlier rush for safe-haven assets gave way to a cross-commodity sell-off by investors scrambling for cash.
Gold plummeted to its weakest in 13 months at $680.80 on Friday, but has rallied since then along with a recovery in other commodity markets, raising hope that the worst may be behind.
“I think all the preconditions are there for gold to take a very healthy run. The physical demand for gold has actually exceeded the ability to supply right around the world,” said Ian Smith, managing director of Newcrest Mining Ltd , Australia’s largest gold producer.