Financial Times hears Comex gold squeeze talk

Section:

Gold Surges as Doubts Rise on Car Bailout

By Chris Flood
Financial Times
Thursday, December 11, 2008

http://www.ft.com/cms/s/0/077b765c-c77c-11dd-b611-000077b07658.html?ncli...

Gold prices hit an eight-week high on Thursday as the dollar staged a broad-based retreat amid fears that the US carmaking sector could still face bankruptcy as a scaled-down government rescue package faced opposition from Republican senators.

Gold surged to $833.80 a troy ounce, its highest level since October 16, before easing back to $825, up 2.1 per cent on the day.

Suki Cooper of Barclays Capital said gold should move towards the $900 level in the coming months but the current rally was likely to be sustained only if an additional catalyst emerged or if the dollar continued to weaken against the euro.

Traders have been hearing talk that the gold market could face a potential squeeze at the end of this year if market participants with futures position on New York's Comex exchange decide not to roll over their positions, because of concerns about counterparty risk and opt for physical delivery instead. But dealers dismissed the threat of a squeeze, pointing out that Comex gold stocks stand at 8.5 million ounces, well above the five-year average of almost 6 million ounces. ...

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