Gold Hits 17 Year High

NEW YORK (Reuters) - U.S. benchmark gold futures powered to a 17-year high Thursday as concerns about inflation and U.S. economic growth drew safe-haven buying and fund interest into the market, traders and analysts said.
The rally came as gold was in the rare position of breaking from its close inverse relationship with the dollar, which climbed against the euro on Thursday.
December delivery gold on the New York Mercantile Exchange's COMEX division finished at $459.30 an ounce, up $5.60, or 1.2 percent, in a range of $452.40 to $459.70.
The contract bolted higher on aggressive fund buying from the opening bell, hoisting the price for a most-actively traded futures month to the loftiest since June 1988.
The move lifted gold past key resistance at the $458.70 mark, set in December 2004 by the then-benchmark COMEX February gold contract.
Gold, which is often viewed as an inflation hedge by investors, has been bolstered recently by near record-high crude oil and gasoline prices as well as worries about U.S. economic growth after Hurricane Katrina, analysts said.
"People are buying gold because it is now apparent that we are going to see massive inflation," said Leonard Kaplan, president of Prospector Asset Management, in Evanston, Illinois. "Gold is the best hedge for inflation."
"Now you have momentum players and volatility players being attracted into the market," said George Gero, senior vice president at Legg Mason Wood Walker.
COMEX gold in June 1988 rose as high as $470 an ounce, as the market was gradually declining from its all-time high of $870 hit in January 1980.
The next major target that traders say would confirm gold was breaking to higher levels stands at last year's peak of $471 an ounce, set on Dec. 2 by COMEX spot December gold.
Kaplan said he believed gold might be able to extend its rise to perhaps $480, but then, in all likelihood, concerns about the historically high speculative long position in the New York futures market could spark some sort of a sell-off.
Bullion on Thursday hit a 2005 high at $455.60 an ounce in New York trading, coming within $2 of a 17-year peak. A jump above $456.75 would be a high dating back to 1988.
Spot gold fetched $455.10/455.80 versus $449.50/0.20 late Wednesday. The Thursday afternoon London fix was $454.80.
Gold priced in euros, meanwhile, made an all-time high at 373.08 per euro on Thursday.
In other precious metals, COMEX December silver gained 3.3 cents to end at $7.078 an ounce, dealing from $6.985 to $7.14. Spot silver reached $7.01/7.04 versus $6.98/7.01 late Wednesday. It fixed at $7.0275.
NYMEX October platinum hit a one-month high of $923.80 an ounce before closing at $919.70 for a gain of $2.20. Spot platinum last traded at $916/920.
December palladium rose $2.40 to $187.15 an ounce. Spot palladium was quoted at $184/186.



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