Source: MarketWatch
San Francisco— Gold futures climbed as high as $578 an ounce Monday as the International Atomic Energy Agency's decision to refer Iran to the United Nations Security Council on concerns about its nuclear program prompted investors to go on the defensive.
But the lofty price level prompted at least one analyst to warn of an upcoming correction.
Gold for April delivery was last trading up $5.20 at $576.80 an ounce. On Friday, the contract lost $5 an ounce as investors locked in some of the week's gains.
The IAEA voted to refer the Tehran government to the U.N. Security Council over the weekend, citing an "absence of confidence" that Iran's recently-resumed nuclear program is aimed at strictly peaceful, civilian energy generation.
The IAEA also cited a "history of concealment of Iran's nuclear activities, the nature of those activities and other issues arising from the Agency's verification of declarations made by Iran since September 2002." IAEA text from its Web site.
It called on Iran to stop its uranium enrichment activities, consider stopping building a heavy water reactor suspected of being used to create plutonium for nuclear weapons, and give the IAEA greater access to the country's nuclear program activities.
Iran immediately rejected the IAEA resolution, and said it will no longer allow snap checks of its nuclear sites. However, a foreign ministry spokesman said the country will go ahead with a meeting with Russia scheduled for February 16 on a proposal that it enrich uranium inside Russia, the BBC reported.
Action Economics economists said gold speculators are currently running a large net-long exposure to gold prices, but "scope for a sustained correction will likely be limited while the uncertainty stemming from the Iran-UN situation continues."
"Chinese markets reopened today after a week long break for the Lunar New Year, which could bring some fresh physical demand to the market too," they said.
Silver, copper strengthen Correction on tap?
Gold climbed to as high as $579.50 an ounce on Thursday, a level not seen since January 1981. Most analysts expect prices to reach $600 an ounce, but Peter Grandich, editor of the Grandich Letter warned that from there, gold may be poised to see a significant correction.
"I don't think gold is going to plunge," but the market needs to "pay heed to its extremely overbought current condition," said Grandich.
"There is enough current momentum to make a run to $600, but somewhere between now and then lies a significant period of correction that is going to pass at least more than a day or two," he said.
Peter Spina, an analyst at online resource GoldSeek.com, said a correction isn't on tap just yet.
"Gold continues to perform very well, despite calls from industry analysts that a correction is due at these levels," he said. "In fact, gold does not appear to want to correct just yet and is looking to run to $600."
Silver, copper strengthen
Silver and copper futures strengthened along with gold Monday, with silver trading at a more than two-decade high and copper touching a record level.
March silver was last trading up 11.5 cents at $9.875 an ounce after a $9.89 high. Prices tapped their highest level since 1984 on Friday at $9.915.
March copper climbed to a record $2.325 a pound and was last up 1.5 cents at $2.323.
"With China now back in the market after the New Year, there was some catching up in early trading on Monday," said William Adams, an analyst at BaseMetals.com.
Elsewhere, April platinum was down $5.20 at $1,077.50 an ounce and sister metal palladium saw its March contract fall $6.20 to $312 an ounce.
On the supply side, copper inventories were down 25 short tons at 11,628 short tons as of late Friday, according to the New York Mercantile Exchange.
Gold supplies rose 579 troy ounces to 7.32 million, while silver stocks added 112,737 troy ounces to 125.5 million troy ounces.
Share This Post
Choose Your Platform: Facebook Twitter Linkedin