Gold touches 25 year High

Gold hit a 25-year high on $ 700 an ounce on Wednesday, instigating some investors to take profits on bullion’s sharp rally this year, while platinum soared up to a record level on high-risk buying.

Platinum billowed to a record $ 1,247 an ounce as fund buying in Japan propelled the most active April 2007 contract on the Tokyo Commodity Exchange (TOCOM) to an all-time high of 4,365 yen per gram.

Gold - which has been used as money, a store of value and in jewelry, hit a 25-year high of $ 700.70 an ounce on Wednesday as investors reacted to a weak dollar and tension over Iran’s nuclear ambitions.

Gold has reached around 35 percent high this year as investors reacted to a weak dollar and tension over Iran’s nuclear ambitions.

Spot gold sharply increased to a record high of $ 700.70 in Asia, up from around $ 500 at the end of 2005 and compared with less than $ 300 at the start of the decade. It was later quoted at $ 698.50/699.00 an ounce, hiked down from $ 699.90/700.90 late in New York on Tuesday. It marked a low of $ 697.70 in Asian trading.

As spot gold rose above $ 700, benchmark gold futures on TOCOM also ascended the daily 60-yen limit to 2,538 yen per gram.
Some dealers expected volatile trade ahead as some investors looked to take profits.

Darren Heathcote, head of trading at Nathan Mayer (N M) Rothschild in Sydney, said "I think there’s a potential of volatility. It looks like until we are going to London, we may all struggle to get over about $ 703."

He continued, "We could be in a wide range today. I wouldn’t be surprised if we have to look at support somewhere around $ 686."

Market talk that economists had urged China to fourfold its gold reserves to 2,500 tonnes from the current 600 tonnes had also stimulated the Gold rally, especially in New York where the metal rose as high as $ 700.50.

China overhauled Turkey as the world’s third-largest gold consumer in 2005. It purchased 241.4 tonnes of gold in 2005, compared with 224.1 in 2004. Investment demand hiked up19.4 percent to 11.7 tonnes last year.

However, some dealers said it was not clear whether China’s central bank would be buying gold at current high prices.

A dealer of Hong Kong said, "We’ve been talking about China increasing its reserves for half a year and I doubt it that it’s going to happen. People made use of this to push up the price last night," he added "The market is still in the upward trend but people are cautious. There’s some physical selling around $ 700."