Gold Futures Soar Above $1,000 An Ounce — Platinum Also Gains

Gold futures briefly broke the psychologically important level of $1,000 an ounce Thursday, propelled by ongoing dollar weakness and bleak news from the financial sector. Gold soared as high as $1,001 an ounce on the New York Mercantile Exchange. Gold for April delivery was last up $17.50 at $998 an ounce. “Gold prices looked set to finally achieve the $1,000 mark this morning, as background market conditions shifted from bad to worse overnight,” said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note. “This will likely become known as the Carlyle/Drake Rally,” Nadler said. “The imminent doom of the bond fund and probable demise of the hedge fund sent icy shivers through the financial markets that way overshadowed the (brief) cheer we witnessed following the Fed’s term facility plan the other day.” Carlyle Capital, the bond fund affiliated with private equity firm The Carlyle Group, is on the verge of collapse after failing to agree a new financing deal with lenders. The fund said late Wednesday that it expects lenders will soon take possession of “substantially all” its remaining assets after it was unable to meet surging margin calls on its portfolio of residential-mortgage-backed securities. Read more. Adding to the bad news from the financial sector, Drake Management LLC, a hedge-fund firm run by Anthony Faillace and Steve Luttrell, is mulling options that include shutting its largest fund after losses and redemption requests from some investors, according to a letter sent to clients Wednesday. Read more. Renewed fears of financial turmoil sent the U.S. dollar plunging, with the greenback temporarily falling through the psychologically key 100-yen level. “This is just the start of things, and if the government continues to give away money and torpedo the dollar, gold will do nothing but move higher.” — Zachary Oxman, Wisdom Financial The gold market is boosted by “dollar weakness, extreme concern over the market and a continued bid by funds that are taking the Fed money they are given and speculating with it vs. lending it,” said Zachary Oxman, a senior trader at Wisdom Financial. “This is just the start of things, and if the government continues to give away money and torpedo the dollar, gold will do nothing but move higher,” Oxman said. On Tuesday, the Federal Reserve and other leading central banks doubled to more than $400 billion the amount of money they’re willing to lend to banks and bond dealers, hoping to flood dysfunctional credit markets with enough money to get them working again. In more bleak economic news Thursday, the Commerce Department reported that consumer spending weakened again in February as U.S. retail sales fell 0.6%. Most kinds of retail stores reported lower seasonally adjusted sales in February even before the impact of inflation was counted. The figures were weaker than expected by Wall Street economists, who forecast no change in retail sales. See Economic Report. Also on the Nymex, May silver rallied 86 cents, or 4.3%, at $20.86 an ounce. April platinum soared $30 to $2,100 an ounce and June palladium gained $2.10 to $513 an ounce. May copper edged up 1 cent to $3.85 a pound. Crude-oil futures edged lower after surging to a record high of $110.70 earlier in the session, with U.S. dollar weakness continuing to underpin oil prices. Gold rose to a record in London and approached $1,000 an ounce on speculation credit-market turmoil will spur demand for the metal as a haven from declines in stocks and the dollar. Silver, platinum and palladium also advanced as the dollar fell below 100 yen for the first time since 1995 and to a record low against the euro after a Carlyle Group fund moved closer to collapse. Gold climbed 19 percent this year as the dollar fell and world equity markets declined. “The financial system’s in trouble at the moment and people are going to the safety of gold,” said Mario Innecco, a futures broker at MF Global Ltd. in London. “You can’t create gold so easily as you can create dollars or euros or pounds.” Gold for immediate delivery rose $10.95, or 1.1 percent, to $993.88 an ounce as of 11:41 a.m. in London, exceeding the previous all-time high of $992.05 last week. Gold is the “anti-dollar,” JPMorgan Cazenove Ltd. analysts including Fraser Jamieson wrote in a report this week, raising their gold price forecast to $910 an ounce this year from $720. Jamieson declined to comment when phoned in London today. The MSCI World Index, a benchmark for stock markets in developed nations, dropped 0.6 percent today, bringing the decline this year to about 10 percent. “We remain long of gold and short of equities,” U.S. trader and economist Dennis Gartman wrote in his daily Gartman Letter today. A “long” is a bet on higher prices and “short” is a bet on a decline. `So Clear’ “The trend is so clear that we are adding to our long gold/short equity trade this morning,” Gartman wrote. Once gold goes over $1,000, it will continue rising, said MF Global’s Innecco. “It’s going to be like crude going over $100 a barrel,” he said. Oil has climbed 10 percent since exceeding that level on Feb. 19. Assets in the StreetTracks Gold Trust, the biggest exchange- traded fund backed by gold, were unchanged yesterday at 652.5 metric tons, compared with the record 654.9 tons on March 10. Platinum climbed $26.50, or 1.3 percent, to $2,094.50 an ounce, rising for a fourth day. An increase in power supplies in South Africa, the world’s biggest producer, will provide mines with 95 percent of their power needs while cities may now face power cuts, the government said last week. `Dim The Lights’ “There is a tension between the private consumer and big industrial user,” said Allan Kerr, chief executive officer of Wogen Plc, the London-based trading company of metals including platinum. “Do they dim the lights in the restaurants so they can produce ferrochrome? That sort of tension is still there I think.” Jubilee Platinum Plc will consider building its own power plant for its Tjate platinum project in South Africa, the London- based company said today. Palladium gained $11.25, or 2.2 percent, to $515.25 an ounce and silver advanced 53 cents, or 2.6 percent, to $20.68 an ounce. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials is up 20 percent this year.

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