6 January 2004, 13:08  Gold extends run higher, clears $425.00

LONDON, Jan 6 - Gold bullion extended its strong bull run in Europe on Tuesday, moving above $425.00 an ounce to hit its highest since December 1988 as the dollar remained under pressure, traders said. The dollar sank to 11-year lows against sterling and new record lows against the euro , trading through the psychologically important $1.27 level to hit $1.2732. The decline lifted gold, which had been showing signs of easing on profit-taking, with $425.00 and then $427.00 cleared as buy-stops were triggered. Spot gold had jumped to $427.75/428.50 by 0957 GMT, up sharply from the New York close on Monday of $421.70/422.50. Broker Dresdner Kleinwort Wasserstein said the break out of the $420.00/424.50 range suggested an initial objective of $432.00.
Analysts said fresh investment fund buying had been attracted by the wider trends in commodity markets, with several base metals at multi-year highs and platinum near 24-year peaks. Technically bullion was looking overbought, but that was having little impact on prices. "On the charts, the previous long-term resistance pegged at $417 will now provide the first point of support and technically, traders will view a dip towards this level as a buying opportunity," Standard Bank London said. "On the upside there is technical blue sky with $450 on the radar screen," it added. Gold rose about 20 percent in 2003 as geo-political tensions and a sliding dollar raised its safe-haven status. A weaker dollar makes dollar-denominated gold cheaper for holders of other currencies, especially the euro.//

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