Capital Gold Group Report: Gold Soars to Two-Week High

Gold (1,127.8013.301.19%) rose to a two-week high on Thursday and platinum group metals rallied to their highest in over 20 months on the back of fresh investment money poured into commodities, signalling another quarter of gains.

A shutdown this week of a smelter at the world's third biggest platinum producer Lonmin, has also buoyed platinum (1,673.2026.301.60%) to its highest since August 2008 and palladium (492.3012.352.57%) to its loftiest since March 2008.

Gold saw little support from the currency markets, where the euro was steady versus the U.S. dollar. The currency hit a three-month high against the yen while the market waited for U.S. macroeconomic data later in the day.

Spot gold rose to $1,118.75 (U.S.) an ounce, its highest since March 19 and was at $1,117.65 an ounce by 0901 GMT, versus $1,112.80 an ounce late in New York on Wednesday.

“Commodities as a group are extremely strong at the moment,” said RBS metals analyst Stephen Briggs. “We had lots of quarter-end massaging going on and that has set us up for probably more money coming into commodities at the beginning of the second quarter,” he said.

Bullion ended the first quarter more than one per cent higher on buying driven by volatile currencies, firm stock markets and oil as well as euro zone debt but it has struggled to sustain gains since hitting a record above $1,200 an ounce last December.

Lucky Break?

“I think gold should eventually break above $1,125 an ounce. Physical demand is still good and there's more investment money coming in,” Afshin Nabavi, head of trading at MKS said.

Thai jewellers were active but physical dealers noted light selling by Indonesian consumers. India, the world's largest consumer, made some inquiries as the wedding season was about to start soon.

U.S. gold futures for June delivery gained $3.3 an ounce to $1,117.8 ounce.

Bullion markets in Singapore, Indonesia, India, Hong Kong and Australia will be closed for Good Friday but Japan is open and investors will be waiting for U.S. non-farm payrolls that could set the tone for currencies.

Analysts are expecting the government payrolls report on Friday to show the economy added 190,000 jobs in March, albeit aided by temporary government hiring for the 2010 U.S. Census.

Spot platinum traded at $1,656 an ounce versus Wednesday's $1,641.50 an ounce while palladium was at $488 an ounce versus $477.50.

Palladium and platinum ended the first quarter 17 per cent and 12 per cent higher respectively, surpassing the single-digit gains posted by gold and silver. (17.930.412.33%)

“We've been quite bullish on PGMs and we think their fundamentals look good. Obviously an accident at the Lonmin smelter helped but actually it's more of a general sense that the market likes the PGMs,” Briggs said.

A recovering auto industry led by China is also another factor boosting the PGM prices. More than half of the world's output of platinum group metals is used in catalytic converters which clean exhaust fumes from vehicles.

Silver was at $17.66 an ounce, after hitting $17.70 an ounce, its highest in ten weeks and versus Wednesday's $17.46 an ounce.

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