Gold Reaches $700 an Ounce; Tops Since 1980

Gold jumped to $700 an ounce in New York for the first time since October 1980 and crude oil rose above $70 a barrel as tensions increased over Iran’s nuclear-research program.The government said a letter from Iran’s president has not reduced its determination to halt the Islamic republic’s plan to enrich uranium. Geopolitical turmoil can spur investors to buy precious metals. Gold touched a record $850 an ounce in January 1980 after the 1979 Iranian revolution cut oil exports. Oil fell on Monday after Iran said the letter was sent.“No one is buying Iran’s overtures,” the head metals trader at Integrated Brokerage Services in Chicago, Frank McGhee, said. “This is purely a geopolitical move for gold. We’ve been here before.The difference is that this time, there are nukes involved.”Gold futures for June delivery rose $21.60, or 3.2%, to close at $701.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier reached $702.20. The precious metal has surged 33% this year.Gold on the Comex has gained 25% since January 9, when Iran said it had resumed nuclear research. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.Crude oil for June delivery rose 92 cents, or 1.3%, to close at $70.69 a barrel on the Nymex. Oil touched $71.45 a barrel during the session. Futures reached $75.35 on April 21 and 24, the highest since trading began in 1983.Gold also gained on speculation central banks will sell their dollar reserves and buy gold. Some of China’s economists are urging the country to quadruple its gold reserves to 2,500 tons from 600 tons, Reuters said, citing an official industry newspaper. China’s reserves have been stable since December 2002.“China wants to move away from U.S.-denominated assets,” said John Licata, chief investment strategist at Blue Phoenix, an energy and precious-metals consulting company in New York. “This is good for gold as the dollar weakens.”

Gold Reaches $700 an Ounce; Tops Since 1980

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