Reuters: Gold Eyes New Highs

Gold Eyes New Highs

Thu Nov 25, 2004 09:45 AM ET

By Nick Trevethan

LONDON (Reuters) - Gold broke to new 16-1/4-year highs above $450.00 an ounce on Thursday, before pausing as players began to eye the next big target of $455, traders said.

With U.S. markets closed for Thanksgiving holidays on Thursday and Friday, analysts and traders said gold might again challenge the day's peak, driven by an ailing dollar in conditions made thin and volatile by the U.S. holiday.

Barclays Capital's Kamal Naqvi said the market was looking at new resistance levels.

"People tell me the next resistance level is $455, but our technical analysts actually say higher at about $461," he said.

"But there's some good selling at the moment and I'm thinking the market...could retrace some more," one trader said.

By 9:32 a.m. EST spot gold (XAU=: Quote, Profile, Research) was at $450.50/451.00, up from New York's late close of $448.75/449.50 and against the high reached earlier on Thursday at $452.75.

The euro (EUR=: Quote, Profile, Research) was seen sitting firm at $1.3216 near all-time highs of $1.3237 set on earlier on Thursday.

Gold has gained 13 percent since early September, climbing steadily on the back of a weakening dollar, which makes dollar-priced gold cheaper for buyers in other currencies.

Analysts and traders said the euro/dollar rate was still the key driver for gold, but they expected a small retracement as players took profits before the metal consolidated above $450.
Traders were also watching for possible intervention by the Bank of Japan, which is worried about dollar-yen levels.

"With the U.S. market effectively on holiday for the rest of the week, it is clear that some market players have seen this as an opportunity to attempt to break and hold above the $450 level," a daily report by Barclays Capital said.

Dresdner Kleinwort Wasserstein questioned whether buying would be strong enough to push gold through the next target of $455.

Analysts added that speculative exposure on the New York gold market remained high, so the risk was growing of sharp moves ahead of the year's end.

Other precious metals mostly firmed on gold's gains.

Spot silver (XAG=: Quote, Profile, Research) was at $7.64/7.67, up from New York's close of $7.53/7.56.

Platinum (XPT=: Quote, Profile, Research) was up to $861.00/867.00 from $850.50/855.50, but palladium fell to $213.00/217.00 from $214.00/218.00. (Additional reporting by Iza Kaminska)