Gold News

Gold jumps, hits new 23-year highs versus the Yen

Gold leapt during the electronic session late Sunday, before holding at new 7-month highs during today's Asian trade.

After finishing last week nearly $20 higher above $663 per ounce in New York – and taking out chart resistance that had proven too strong 3 times so far in 2007 – gold rose to $669.30 as the Hong Kong and Mumbai gold markets opened today.

"Gold support is now anticipated at $656," says the Monex report – "then $635, and then $622. Resistance anticipated at $669, then $682, and then $693."

Gold has now climbed 10% from the dip to $605 it hit at the start of Jan. From 12 months ago, the metal is trading nearly 20% higher.

"The growing tension between US & Iran & fresh fund buy interest prompted a technical breakout on Friday," says Brandon Lloyd for Mitsui in Sydney.

"There is nothing to suggest that gold won't test the $675 spot target this week & given the nature of its current trading pattern, the next upside objective is set at last year's $728 high."

Today's move came despite Tokyo being shut for the "national foundation" holiday. Gold versus the Yen has still risen above the top of last May's spike, clearing ¥81,500 for the first time since Nov. 1984.

Following the G7 summit of world financial leaders this weekend, "I think there's speculation about where the Yen would go," said Darren Heathcote of Investec Australia earlier to Reuters, "[and] what that would possibly also mean for gold, with Japanese fears of inflation."

"We might see more of a reaction tomorrow when Tocom reopens [tomorrow]. Certainly, gold is technically looking strong. I see no reason why, at this present moment, we wouldn't want to head north again to test recent highs."

(What does gold's huge bull run against the Yen signal? Read more here...)

A pullback in the Dollar versus Sterling and Euros, however, left today's Asian peak no higher for UK and Eurozone investors than Friday's top.

Gold against Sterling opened London today trading just below £342. Versus the Euro, gold began the week in Europe at €511.50 per ounce.

"While traders report good demand from retail investors on present levels, industrial end consumers and European jewellery producers currently hold back," says Wolfgang Wrzesniok at Heraus, the giant German metals refinery.

"The situation is somewhat different in India," he adds today. "One reason for [this] current buying is the ongoing wedding season, which will last for another month. On the supply side our colleagues in Hong Kong report that the selling of scrap in China continues in the meantime, similar information reached the market from the important Turkish market...

"The selling of either scrap or newly-mined material was most likely also the main reason for the reported increase of the gold holdings of some central banks, amongst them those of Russia, Kazakhstan, the Philippines and Greece."

Besides discussing the plunging Japanese Yen – but failing to name it directly in the post-summit communique! – this weekend's G7 meeting in Essen, Germany also looked at the recent proposal by a group of "experts" that the International Monetary Fund (IMF) should sell 400 tonnes of its gold to shore up its ailing balancesheet.

IMF managing director Rodrigo Rato reports that the G7 leaders were "open-minded" about the proposal – which could mean anything or nothing, of course.

The IMF is the world's third-largest holder of gold after the US and Germany. Should gold investors worry that it's considering a large sale of its gold?

To find out more – click here now and read on...

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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