NEW YORK -(Dow Jones)- Gold futures soared 8%
Friday, breaking above $300 an ounce in a rally credited
mainly to technical factors and volatility in the Treasurys
market. Oil prices also climbed on the New York futures
market.
At the New York Commodities Exchange, April gold
surged $23.10, or 8%, to settle at $313.00 an ounce - its
highest price since October.
Traders and analysts said gold jumped mainly on
technical buying after a series of buy stops - or preplaced
orders to buy - were hit. Talk of producer buybacks and
bond-market jitters contributed to the market's gains,
according to some market observers.
Troubled gold miner Ashanti Goldfields of Ghana was one
of the producers rumored to be buying back some gold
that been sold ahead in order to hedge against a price
decline. Ashanti declined to comment. A source familiar
with the company said, however, that Ashanti might be
making small buybacks, but that significant ones were
unlikely because it would need the agreement of all its
counterparties.
Fellow gold producer Placer Dome said it is suspending
its gold-hedging activities in light of improving gold
markets and reduced producer hedging.
Other market observers pointed to bond-market tumult as
a significant underlying factor in gold's gains. The
benchmark 30-year U.S. Treasury bond soared
Wednesday and Thursday amid talk that some traders
had been caught with short positions they were unable to
fill with cash bonds. There was also consternation in the
Treasury market about the unusual long-end inversion of
the yield curve.
Friday, Treasurys reversed course, with the long bond
falling more than a point on inflation jitters sparked by a
stronger-than-expected January jobs report.
"Gold does best in times of uncertainty," said Jeffrey
Christian, managing director of CPM Group, a New
York-based research and consulting firm. "The economic
world is changing and no one's quite sure how the
intermarket relations between debt, equities,
commodities, and interest rates will work. People are
saying maybe a little bit more exposure to gold makes
sense."
Key Wall Street names were among those firms that
were thought to have lost money this week when trades
based on the direction of U.S. rates went sour, and major
European financial firms probably had made similar
trades, traders and strategists said.
"It's just as likely that European institutions have been
caught on the wrong side of the market move as those in
the U.S.," said Stephen Lewis, chief economist at
Monument Derivatives, a London brokerage.
March silver jumped 28.4 cents, or 5.4%, to end at
$5.572 an ounce. Buying in silver was inspired by the
gains in gold, market observers said.
April platinum gained $4.70, or 1%, to finish at $479.50
an ounce after rising nearly 2% Thursday on strong
industrial demand and only a trickle of supplies coming
out of Russia, dealers said.
Among industrial metals, March copper added 0.15 cent
to settle at 82.75 cents a pound.
Crude-oil and product futures settled higher at the New
York Mercantile Exchange, as strong heating-oil prices
kept sellers out of the energy complex.
March heating oil rose 0.88 cent, or 1.1%, to end at
78.78 cents a gallon after jumping 3.1% on Thursday.
March crude oil climbed 79 cents, or 2.8%, to settle at
$28.82 a barrel after rising 1.7% Thursday. April crude
rose 69 cents, or 2.5%, to $27.82 a barrel following
Thursday's 1.7% advance.
March unleaded gasoline added 1.27 cents, or 1.6%, to
finish at 79.83 cents a gallon after a 2.5% rise Thursday.
March natural gas jumped 8.3 cents, or 3.1%, to settle at
$2.742 per million BTUs after falling 3.6% Thursday.
Soaring prices in the physical heating-oil market in New
York Harbor set the complex's bullish tone, traders said.
The prices for immediate barrels in the Harbor were as
high as $1.88 a gallon, or more than double the futures
price. "You're not going to have a lot of selling of heating
oil futures with the physical market that high. The
question is, why aren't futures higher?" one analyst said.
Another said the product and crude market look at each
other for cues, and none were showing signs of
weakness. "Crude traders will look at heating oil traders
and say, 'well if you're not dropping neither are we,'" said
Victor Yu, an energy analyst at Refco in New York.
Since Tuesday, when March products began trading as
the front-month contract, March heating oil has gained
6%, as has March gasoline. March crude, meanwhile,
gained 5%.
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