Gold prices continued to soar on Monday,
reaching their highest level in nearly a quarter century, as
investor interest in the precious metal continued to peak.
Spot gold settled $1.40 higher at $528.40, after easing back
from a fresh high of $538.50. February gold, the most active
contract, settled up $1.30 at $531.50 an ounce at the New York
Mercantile Exchange, off its high of $544.50 reached earlier.
Gold, trading at levels not seen since early 1981, has gained
for eight straight business days. Gold and silver futures have been
surging on momentum-based speculative and fund buying, as well as
concerns about inflation.
Bill O'Neill of LOGIC Advisors said the longer-term picture for
gold remains positive and the metal is likely to reach $600 an
ounce in 2006.
Physical demand for gold is holding steady despite the rise in
prices, O'Neill added.
"We are seeing solid levels of demand in Russia, the Middle
East and Vietnam," he said.
A mixture of Central Bank buying and fund interest is keeping
gold buoyant, but O'Neill said the market in a "state of frenzy."
"It surprised me, it would jump like this," Sonny Davidson, an
Elko investment adviser for Edward Jones told the Elko Daily Free
"Guys in the know say it's supply and demand, but it also has
to do with what the world is doing. A number of investors feel it's
a good hedge against the market," he said.
Monday was another off day on Wall Street as the Dow Jones
averages lost 10.81 points.
Edward Jones isn't encouraging its clients to jump into the gold
market, Davidson said.
"We're really a conservative firm. We don't push much in the
way of commodities.
"We know gold is volatile, but if customers want gold, we will
sell it," Davidson said.
As the price of gold jumped, Newmont Mining Corp. soared 74
cents to a 52-week high of $50.40 on the New York Stock Exchange.
Barrick Gold Corp. lost 17 cents to close at $27.60 and Placer
Dome Inc. lost 51 cents to end the day at $22.65.
Barrick Gold withdrew its challenge of Placer Dome's shareholder
rights defense plan on Sunday and extended its multibillion-dollar
hostile takeover bid until mid-January.
Barrick is the No. 2 gold producer in Nevada, behind Newmont
Mining. Placer Dome is involved in three Nevada mines.