Gold and Platinum at Multi-Year Highs: Copper at an 18-year high

Written By Luke Burgess

Posted October 11, 2005

U.S. gold futures reached its highest point in almost 18 years yesterday at $482/oz.

Gold initially dropped after last week’s US jobs report. But this week’s prices have been fueled by concerns over the US economy and recent reports of potential terror attacks in New York as well as good ole physical demand. A weak dollar against the euro also helped gold’s outlook.

Many traders and analysts, including myself, believe gold will hit $500 in the coming months because of solid demand for investment and jewelry as well as soaring energy prices and forecasts that there could be less mine production in the near future.

I just got off the phone with Mike Schaefer. And he believes that once gold breaks the psychological $500 mark, all bets are off. Gold investments are going to fly.

Gold and jewelry sales are increasing across Saudi Arabia.

Demand for gold increased by 28% and jewelry by 18% in the second quarter of this year compared to the same period in 2004.

Strong oil prices have provided strength in consumer optimism in Saudi Arabia, as well as in the rest of the Gulf, providing an afterburn effect in these nations economy.

The key short-term guide is inflation fears from higher oil and commodity prices. But low-cost Chinese manufactured goods have been keeping a lid on global inflation in spite of rising raw material costs.

In the long term limited mine supply and the growing demand from China and India will continue to push prices up. And the market is starting to price in the fact that the huge U.S. trade deficits will become a significant problem for the dollar over the long haul.

Gold prices have increased by more than $50/oz since mid-July, over 11%, with only limited corrections.

December futures for the yellow metal opened $0.60 up before closing at.

While gold continues to journey northward, copper visits uncharted territory.

Platinum Hits 25-Year High

January platinum surged today hitting a 25-1/2-year high of $948/oz as speculators continued to buy the metal, used mainly in jewelry and to clean car exhaust fumes.

Some analysts believe that the break of the $942 level could create conditions to test the next big level of $1,000.

But this rally is primarily driven on speculative buying and, unlike gold, has very little physical buying to support prices at this level.

I wouldn’t rule out another push over $950 in the near term, as the metal has been following gold. But anything north of $950 will be met with some resistance.

Platinum has the most constructive fundamentals among all the precious metals, but the current levels are a little high to be justified.

Price may experience resistance at $952 and gain support around the $944 range.

Copper Over $1.83
Today copper touched an all-time high $1.838/lb

Supply and demand issues continue to call the shots in the copper market, driving prices for the industrial metal to an all-time high today.

Supply disruptions in North America and Zambia are causing some regional tightness in copper. As a result the metal is being amply imported from Europe to the U.S.

Added supply is on the way, but the short term looks tight and prices may test $2.00/lb.

You might expect copper prices to cool off over the rest of the week due to some profit taking as prices have now touched record highs in nine of the last ten New York sessions.

– Luke Burgess

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