Precious metal hits highs, causes commercial concern

“AT the moment it is very difficult for people who are getting married,” said Gisela Lesar of Adrian & Meyer Trend Shop in Windhoek’s Maerua Mall.

“In a few years, if the price goes down again, they will have paid a fortune,” she added. Lesar was, of course, talking about the traditional band of gold that most couples must find the money for when they get a Christian wedding.According to Lesar, the price of gold is almost double what it was a year and a half ago.”You buy 9 carats today for as much as 18 carats would have cost you back then,” she said.Le Roux of the Jewellers Emporium, elsewhere in the same mall, was quick to predict that the international gold price could soon surpass the psychologically important US$1 000 mark.”This is bad for jewellery manufacturers at the moment,” said the goldsmith.However he did point out that “it is good for people who own gold – heavy gold jewellery is now worth more.”Le Roux acknowledges that for small producers it is a difficult time to purchase gold and this pushes up the selling price for gold products.According to Le Roux, the contributing factors include the instability in the US market, US elections and the increase in oil prices in the Middle East, but he bases his assessment on JSE predictions that the price of gold will only go up more.Interestingly Le Roux noted that Chinese markets had bought up huge quantities of gold last year, making them better off now.GLOBAL GOLD Gold prices rose towards historic highs this week as the dollar stayed weak on expectations of a half-percentage-point cut in US interest rates.Internationally, the market looked ahead to a slew of US bank results, which could intensify financial market uncertainty and influence the dollar.Any signs of further weakness in the US currency might attract more investors into the precious metals market.Other key metals also advanced, with platinum near record highs and silver keeping within sight of a 27-year peak hit on Monday.Palladium eased but was near a two-month high.”Markets don’t go in a straight line so I wouldn’t be surprised to see some pullback, but medium term I am still very friendly to the gold market,” said Jeremy East, head of metals trading at Standard Chartered Bank.”There is now a lot of expectation in the market of a dramatic interest rate cut.The other supporting factor that we have seen continuing is bad news for the banks.We are going to see a number of results coming out from financial institutions and the market would be watching them very carefully.”Spot gold rose as high as US$910,70 an ounce and was at US$904,75/905,45 by 11h03 GMT.Bullion closed at US$902,10/902,80 in New York late on Monday, when it hit an all-time high of US$914 on investor buying, driven by the dollar’s slide.US gold futures hovered near record highs.The most active February contract gained US$2,6 an ounce to US$906,10.Gold’s appeal as an alternative investment is increasing as the dollar comes under pressure on concerns that some of the largest US banks will report weaker earnings this week.The dollar was steady against the euro, but was not far from a record low hit last year, with the market expecting that US retail sales data and banking results could boost the case for aggressive, growth-boosting interest rate cuts.Citigroup Inc was the first big bank this week to report fourth-quarter earnings and the spotlight will be on how much the credit crisis is damaging banks’ bottom lines and increasing the risk of a recession.”We continue to see decent buying even at these record high prices.But the market remains nervous with no one willing to enter into short positions or willing to call the turning point – something that supports prices at least for now,” Standard Bank said in a report.Investors continued to park their money in exchange-traded funds, backed by physical metals.Gold held in New York-listed StreetTRACKS Gold Shares, the world’s largest gold-backed ETF, rose to a record high of 652,56 tonnes on Monday.London-based ETF Securities said in a statement its precious metal ETFs had accumulated over US$1,1 billion since April 2007.In the past 6 weeks, they added US$260 million, shared equally amongst platinum, silver, gold and a precious metals basket.In the physical sector, consumers in India, turned their backs on jewellery shops as gold hit record high, but others showed more resilience with dealers noting demand out of China and other parts of Asia.India is the world’s largest consumer of gold.Platinum rose to US$1,577/1,582 from US$1,572/1,577 an ounce in New York on Monday, when it spiked to a record high of US$1,590,50, tracking gold’s rally.”The outlook for the white metal is still extremely bullish, with the tight fundamental picture limiting price dips and the white metal should now look to challenge US$1600/oz,” James Moore, precious metals analyst at TheBullionDesk.com said in a note.Silver rose to US$16,36/16,41 from US$16,31/16,36 an ounce, but off Monday’s 27-year high of US$16,58.Palladium fell to US$377/382 an ounce from US$379/384.* Additional reporting by Nampa-ReutersLesar was, of course, talking about the traditional band of gold that most couples must find the money for when they get a Christian wedding.According to Lesar, the price of gold is almost double what it was a year and a half ago.”You buy 9 carats today for as much as 18 carats would have cost you back then,” she said.Le Roux of the Jewellers Emporium, elsewhere in the same mall, was quick to predict that the international gold price could soon surpass the psychologically important US$1 000 mark.”This is bad for jewellery manufacturers at the moment,” said the goldsmith.However he did point out that “it is good for people who own gold – heavy gold jewellery is now worth more.”Le Roux acknowledges that for small producers it is a difficult time to purchase gold and this pushes up the selling price for gold products.According to Le Roux, the contributing factors include the instability in the US market, US elections and the increase in oil prices in the Middle East, but he bases his assessment on JSE predictions that the price of gold will only go up more.Interestingly Le Roux noted that Chinese markets had bought up huge quantities of gold last year, making them better off now.GLOBAL GOLD Gold prices rose towards historic highs this week as the dollar stayed weak on expectations of a half-percentage-point cut in US interest rates.Internationally, the market looked ahead to a slew of US bank results, which could intensify financial market uncertainty and influence the dollar.Any signs of further weakness in the US currency might attract more investors into the precious metals market.Other key metals also advanced, with platinum near record highs and silver keeping within sight of a 27-year peak hit on Monday.Palladium eased but was near a two-month high.”Markets don’t go in a straight line so I wouldn’t be surprised to see some pullback, but medium term I am still very friendly to the gold market,” said Jeremy East, head of metals trading at Standard Chartered Bank.”There is now a lot of expectation in the market of a dramatic interest rate cut.The other supporting factor that we have seen continuing is bad news for the banks.We are going to see a number of results coming out from financial institutions and the market would be watching them very carefully.”Spot gold rose as high as US$910,70 an ounce and was at US$904,75/905,45 by 11h03 GMT.Bullion closed at US$902,10/902,80 in New York late on Monday, when it hit an all-time high of US$914 on investor buying, driven by the dollar’s slide.US gold futures hovered near record highs.The most active February contract gained US$2,6 an ounce to US$906,10.Gold’s appeal as an alternative investment is increasing as the dollar comes under pressure on concerns that some of the largest US banks will report weaker earnings this week.The dollar was steady against the euro, but was not far from a record low hit last year, with the market expecting that US retail sales data and banking results could boost the case for aggressive, growth-boosting interest rate cuts.Citigroup Inc was the first big bank this week to report fourth-quarter earnings and the spotlight will be on how much the credit crisis is damaging banks’ bottom lines and increasing the risk of a recession.”We continue to see decent buying even at these record high prices.But the market remains nervous with no one willing to enter into short positions or willing to call the turning point – something that supports prices at least for now,” Standard Bank said in a report.Investors continued to park their money in exchange-traded funds, backed by physical metals.Gold held in New York-listed StreetTRACKS Gold Shares, the world’s largest gold-backed ETF, rose to a record high of 652,56 tonnes on Monday.London-based ETF Securities said in a statement its precious metal ETFs had accumulated over US$1,1 billion since April 2007.In the past 6 weeks, they added US$260 million, shared equally amongst platinum, silver, gold and a precious metals basket.In the physical sector, consumers in India, turned their backs on jewellery shops as gold hit record high, but others showed more resilience with dealers noting demand out of China and other parts of Asia.India is the world’s largest consumer of gold.Platinum rose to US$1,577/1,582 from US$1,572/1,577 an ounce in New York on Monday, when it spiked to a record high of US$1,590,50, tracking gold’s rally.”The outlook for the white metal is still extremely bullish, with the tight fundamental picture limiting price dips and the white metal should now look to challenge US$1600/oz,” James Moore, precious metals analyst at TheBullionDesk.com said in a note.Silver rose to US$16,36/16,41 from US$16,31/16,36 an ounce, but off Monday’s 27-year high of US$16,58.Palladium fell to US$377/382 an ounce from US$379/384.* Additional reporting by Nampa-Reuters

In an age of information overload, Sunrise is The Namibian’s morning briefing, delivered at 6h00 from Monday to Friday. It offers a curated rundown of the most important stories from the past 24 hours – occasionally with a light, witty touch. It’s an essential way to stay informed. Subscribe and join our newsletter community.

The Namibian uses AI tools to assist with improved quality, accuracy and efficiency, while maintaining editorial oversight and journalistic integrity.