Reply #74: Gold bounces from one-week low, may gain further (London) [View All]

[EuroObserver]

http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-01-19T163454Z_01_ALL959819_RTRIDST_0_OZABS-MARKETS-PRECIOUS-20060119.XML
Thu Jan 19, 2006 6:34 PM GMT8
LONDON (Reuters) - Gold prices gained 2 percent on Thursday, recovering from a fall to a one-week low in Asia as upbeat sentiment prompted funds managers to pour more money into the safe-haven metal.

The market recovered from jitters in Japanese stocks and gold futures markets and was seen targeting this week's 25-year peak of $564 an ounce, they said.

"The gold market has seen some massive swings, and volatility has been very dangerous. However, profit-taking has always been followed by a very quick rally," a dealer in London said.

"Typically in a bull market, negative news is ignored and positive news encourages more buying. The funds like it, the funds are making money and I think funds will continue to invest in gold," he said.

Spot gold rose as high as $554.80 an ounce after dropping to $540 in Asian trade. It was quoted at 552.50/553.30 by 1543 GMT, compared with $543.60/$544.40 late in New York on Wednesday, when it fell nearly $10.
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Investors remained bullish because of the dollar's weak outlook, Middle East tensions and strong oil prices.

Industry sources said a large commodity fund in the United States was sniffing around the market to buy.

The market also absorbed news of an audio tape aired by Al Jazeera TV that was said to be of Osama Bin Laden warning of new attacks inside the United States while also offering a conditional truce with Americans.

A trader said: "I think that people will rather act on events."

Several polls and comments by industry experts suggested gold had room for further price gains this year. /more...