Gold Rises to 27-Year High on Oil; Silver Gains to 26-Year Peak
Nov. 7 (Bloomberg) -- Gold reached a 27-year high as record oil prices deepened concern that inflation will accelerate, and a slumping dollar boosted the appeal of precious metals as an alternative investment. Silver also gained to a 26-year high.
Oil in New York rose to a new high above $98 a barrel and the dollar extended its slide to $1.4666 per euro, the lowest ever. Gold is seen by some investors as a hedge against inflation, and a weaker U.S. currency makes the dollar-priced metal cheaper for holders of other currencies.
``We may see gold prices breaching the $850 level, at the earliest tonight,'' said Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo. ``It's like people are pushing gold prices toward the record.''
Bullion for immediate delivery rose as much as $11.99, or 1.5 percent, to $836.99 an ounce, the highest since January 1980, when it reached a record $850 an ounce. The metal was at $834.90 an ounce at 3:51 p.m. Singapore time. Gold has gained more than threefold since the end of 2000 when it fetched $272.25 an ounce.
Silver for immediate delivery jumped as much as 31 cents, or 2 percent, to $15.91 an ounce, the highest since Dec. 1980. The metal stood at $15.75 at 3:47 p.m. Singapore time. It has climbed 22 percent this year, heading for a sixth straight annual gain.
Gold, used in jewelry and as an investment, has gained 31 percent this year, heading for the seventh straight yearly gain. The rise has helped boost shares of mining companies, including Newmont Mining Corp. and Barrick Gold Corp.
Crude oil for December delivery rose as much as 1.5 percent to $98.17 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That's the highest intraday price since trading began in 1983. It traded at $97.93 at 3:55 p.m. in Singapore.
The dollar fell against the euro on speculation losses related to U.S. subprime-mortgage defaults will prompt the Federal Reserve to cut interest rates for a third time this year. Gold denominated in euros has gained 18 percent in 2007.
``The price move of crude oil is unprecedented and no one knows when the subprime problem will end,'' Interes's Saito said. ``This has made funds look for gold and other commodities.''
Investment in the StreetTracks Gold Trust, an exchange- traded fund backed by bullion, has risen 32 percent this year to a record 598 metric tons.
``When you compared the current inflation rates and crude oil prices with those in early 1980, it's not strange to see gold prices at $1,000 an ounce,'' said Tatsuo Kageyama, an analyst at Kanetsu Asset Management Co. in Tokyo.
December-delivery gold on the Comex division of the New York Mercantile Exchange rose as much as $16.10, or 2 percent, to $839.50 an ounce, the highest for a most-active contract since Jan. 21, 1980, the day gold reached a record $873. It traded at $837.30 at 4 p.m. in Singapore.
In Japan, gold for delivery in October rose 75 yen, or 2.5 percent, to close at 3,090 yen a gram ($840 an ounce) on the Tokyo Commodity Exchange. It earlier reached 3,102 yen, the highest since March 1984.