[NYTr] Gold nears record-high on dollar, Pakistan turmoil

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Reuters via Yahoo - Dec 30, 2007
http://news.yahoo.com/s/nm/20071231/bs_nm/markets_precious_dc_2

Gold nears record-high on dollar, Pakistan turmoil

By Lewa Pardomuan

Gold rallied to a 7-week high on Monday and close to a record high of
$850 on speculative buying driven by a weak U.S. dollar and tensions in
Pakistan following the assassination of opposition leader Benazir
Bhutto.

But thin trading in Asia ahead of the New Year holidays meant gold and
other precious metals were prone to sharp fluctuations. Platinum
dropped but held near last week's record high of $1,542 an ounce.

Spot gold hit an intraday high of $842.90 an ounce before dipping to
$842.00/842.80. This was still higher than $837.80/838.50 late in New
York on Friday.

"There's still a potential for further unrest in Pakistan following
Bhutto's assassination. I guess there's a potential for us to push
higher and test the highs around $847 at least," said Darren Heathcote
of Investec Australia in Sydney.

"I think $847 will be the initial technical point to breach. When
London comes in, more stops get taken out," he said.

Gold hit a record high at $850 January 1980 on high inflation linked to
high oil prices, Soviet intervention in Afghanistan and the effects of
the Iranian revolution. After adjusting for inflation, that level was
equal to $2,079 at 2006 prices.

Gold has risen more than 30 percent this year -- the biggest annual
gain since 1979 -- as a number of factors, including a weak U.S.
dollar, record-high crude prices, credit market turmoil and falling
U.S. rates, boosted its safe-haven appeal.

The latest safe-haven buying was sparked by Bhutto's killing last week,
which plunged Pakistan into crisis. Electoral officials hold an
emergency meeting on Monday to decide whether to go ahead with a
January election that is aimed at shifting the country from military to
civilian rule.

Bhutto's killing in a suicide attack on Thursday triggered bloodshed
across the country and rage against President Pervez Musharraf, casting
doubts on nuclear-armed Pakistan's stability and its transition to
civilian rule.

"I think it's possible to touch $850 in the near term. It moved in a
massive range already in the past 24 hours," said David Moore, a
commodity analyst at the Commonwealth Bank of Australia in Sydney.

"It's possible it might go higher in the near term. It's obviously been
supported by a number factors but probably the thin trading conditions
are sort of exacerbating the movements in the gold price at the
moment," he said.

The dollar was under pressure Monday as expectations of more U.S.
interest rate cuts enhanced the euro's yield advantage, while the yen
benefited from a reluctance to hold risky positions over the holidays.

The euro was hardly changed at $1.4715, compared to $1.4714 late in New
York on Friday and just off a two-week high of $1.4727. The dollar was
barely moved at 112.60 yen, having fallen almost a full percent on
Friday to 112.63.

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