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  • Nov 11th, 2005
  • Comments Off on Gold breaks dollar shackles to trade higher in Asia
Gold decoupled from currency markets on Thursday to post sharp gains in the face of a rising dollar, reasserting its safe-haven investment status. A stronger dollar has weighed heavily on gold prices in recent weeks blamed for shaving as much as 5 percent off prices since they climbed to an 18-year peak of $480.25 in mid-October.

But, since the last London fix, gold has climbed 1 percent, or $4.45 an ounce, as investors remain wary of European economic growth prospects, social unrest in Europe and mounting violence in the Middle East.

"Gold is actually rising in a vote against the euro, which is a departure," a dealer said.

Three blasts, blamed on suicide bombers, at three international hotels in Jordan's capital on Wednesday, killed at least 57 people and wounded more than 100 others, government officials and police said.

In France, emergency measures have been imposed in 38 urban zones, towns and cities including Paris after youths threw firebombs at police and torched hundreds of cars in a 13th night of violence.

Spot gold raced more than $3 higher to $467.15/$467.65 an ounce in Asian trade versus the late New York price, also finding appeal thanks to technical support markings above $460 and a bullish sentiment for the wider metals complex.

"This helped offset the effects of falling oil prices," another dealer said. Rising oil, typically a warning of coming inflation, often lifts investment in gold as a hedge against the dollar.

New York platinum futures rose to a 26-year high overnight as funds piled in on bets that growing commercial demand for platinum group metals would keep prices rising.

Palladium futures rose more steeply. Both are crucial components of anti-pollution systems in motor vehicles. Platinum is widely used in fine jewellery, and palladium jewellery recently became a popular, cheaper alternative.

Silver was 1 cent higher at $7.67/$7.70 an ounce. Platinum was $1 higher at $950/$953 an ounce, while palladium also gained $1 to $234/$239 an ounce.

The dollar advanced against the euro and yen to remain within striking distance of 2-year highs.

Copyright Reuters, 2005


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