12 December 2005, 17:13  Gold around new highs

Gold fever drew more investors into the bullion market on Monday as another bout of heavy buying in Japan helped push prices above $540 an ounce and to their highest in nearly a quarter of a century. The rally in gold, which has lifted prices by over 20 percent this year, has spilled into other precious metals, with platinum hitting its highest since March 1980 and silver trading at its firmest since May 1987. Fund managers have been buying gold as part of a strategy to diversify portfolios, while other investors have speculated about potential purchases from some of the world's central banks -- previously long-time sellers. Spot gold was quoted at $537.90/538.70 an ounce by 1313 GMT, off an earlier peak of $540.90, the highest since March 1981, but still up two percent from $526.50/527.20 in New York on Friday. "Some of the U.S. funds are now taking profits, but the Japanese are still buying," said Jeremy East, global head of precious metals at Commerzbank. The sharp price acceleration since mid-November has come from heavy buying from Japan. Some believe investors there are shunting into gold due to worries about currency weakness.

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