NEW YORK, Jan 14 (Reuters) - U.S. gold futures surged to a
record high above $910 an ounce on Monday, fueled by a
combination of strong fund buying amid a dollar slide, short
covering and speculation of further rate cuts.
Meanwhile, a Citigroup metals analyst said that gold prices
will test a record $1,000 an ounce this year, boosted by
growing investment interest, safe-haven demand and strong
market fundamentals.
At 10:53 a.m. EST (1553 GMT), the most-active gold contract
for February delivery at the COMEX division of the New York
Mercantile Exchange GCG8 rallied $11.50 or 1.3 percent to
$909.20 an ounce. It hit a record high of $915.90 and bottomed
at $893.10.
The dollar dropped to seven-week lows against the euro and
yen on Monday as concern weak U.S. corporate earnings will
prompt more interest rate cuts weighed on currency markets.
The Federal Reserve is widely seen cutting its key rate in
January by a half-point to 3.75 percent, and futures are pricing
in the risk of a Fed rate cut even before the Jan. 29-30
meeting.
Gold is viewed as an alternative to holding the dollar.
Therefore, the value of gold often rises when the U.S. dollar
falls.
"Risk averse investors jumped on the bandwagon as the $900
resistance was surpassed," Gero said.
Gold's appeal as a safe-haven investment has increased due
to worries of further write-downs among major financial
institutions and credit market meltdown in the United States,
the world's biggest economy.
In just three weeks, the February contract has jumped
nearly $120 to Monday's peak of $915.90 from its bottom of
$799.50 on Dec. 21.
In research news, John Hill, director, metals research, at
Citigroup in San Francisco, told clients in a note dated Sunday
that he fully expects a test of $1,000 ounce in 2008.
"We believe gold has entered a new investment-driven phase,
in a much more hospitable macro setting. Catalysts are rotating
from safe-haven demand, to currencies, to the re-flation trade,
as new buyers enter the market," Hill said.
Spot gold <XAU=> fetched $908.50/909.20 an ounce, up from
Friday's New York close of $895.70/896.50. London bullion
dealers fixed the afternoon spot reference price at $902.00.
