Rising tensions in the Middle East resulted in strong gains for the gold price today as investors looked for potential safe havens.
Spot gold soared US$21.9 to US$1,731.02, clawing back all of last week's losses as violence escalated between Israel and Palestinians in the Gaza Strip.
Traders said the conflict overshadowed bullish hints from US President Obama that talks with Congress over a resolution to the US fiscal crisis had gone well.
Potentially, that could be bad for gold if it reduces the need for more monetary stimulus measures. Demand for gold ETFs rose sharply on Friday, according to reports today.
Other precious metals were strong, with platinum boosted by predictions that the recent turmoil in South Africa could hit supply in 2013 and further out.
Owing to the loss of about 350koz to strikes, a strong Chinese jewellery market and further tensions on supply in the future, the underlying cumulative platinum surplus will be approaching zero in 2013, predicts broker Nomura.
"We now expect the market to be in deficit through 2014,” it added.
“Based on this analysis, we think higher platinum prices are likely to be maintained after the coming first quarter pinch point. This price momentum could have a significant impact on a very out-of-favour," said broker.
Nomura also now expects the price of platinum to rise to a peak of USD 1,950/oz, with a long-term platinum price of US% 1,800/oz.
Due to the possibility of more industrial unrest in South Africa, Nomura suggests investors look at ETFs first, but for those prepared to take the risks the operational leverage is compelling for special situations such as Lonmin and Aquarius Platinum, it argues.
Major movers
Randgold Resources (LON:RRS) up 230p at 6,635p
African Barrick Gold (LON:ABG) up 9.1p at 394p