Gold surpasses Elliott Wavers'' point of no return

Fed Governor's Comments On Interest Rates Cited

a href=http://www.reuters.com/newsArticle.jhtml?type=topNewsamp;storyID=4075497...

By Alden Bentley

NEW YORK, Jan. 5 (Reuters) -- Gold futures traded above $425
an ounce for the first time in more than 15 years in New York on
Monday, starting the new year as it ended 2003 -- rallying as
investors diversified out of the crumbling dollar.

All precious metals surged on the first trading day of 2004, but
only gold is considered a form of currency and thus a hard
alternative to the sliding greenback.

It extended last year's 20 percent gain as the dollar hit a new
low against the soaring euro and fell to its cheapest level against
the yen in three years.

At the COMEX division of the New York Mercantile Exchange,
February gold rose to $425.70 an ounce, its highest since 1988,
after London trading closed for the day.

Funds on the floor chased it above the high from February 1990
at $425. The benchmark contract ended up $8.70, or 2.1 percent,
at $424.80 an ounce.

quot;It ran massive stops over $420,quot; a floor broker said, referring to
pre-placed buy orders. quot;The dollar is therequot; as a factor, quot;but at
some point it kind of was on its own.quot;

Spot gold peaked at $424.60, last seen in December 1988. It
was quoted at $421.70/2.50 an ounce, up from its New York
close at $414.80/5.30 on Wednesday. The exchange was
closed on Thursday and Friday for New Year's observance.

Analysts said gold could touch $450 for the first time in 16
years because of dollar weakness, fears of fresh attacks on
the United States, and the potential for a military and political
quagmire in Iraq.

Analyst Kamal Naqvi of Barclay's Capital in London predicted
hedge-fund-like commodity trading advisors would look to
continue acquiring commodities, and that fresh funds would
flow into the sector early in 2004.

quot;People were looking to see if that would evidence itself (today)
and it did,quot; he added.

Europe's 5-year-old currency rose to $1.2695, making gold
more affordable to traders holding euros. The dollar slide
snowballed after Federal Reserve Governor Ben Bernanke on
Sunday said that while the U.S. economy appears to have
turned a corner, the Fed was right to hold interest rates at
45-year lows, given that inflation remains so low.

quot;No hint that the dollar's fallen too far to fast,quot; James
Pogoda, vice president of precious metals at Mitsubishi
International Corp, said of Bernanke's remarks. quot;So keep
pressing the same direction, I guess -- dollar lower, gold
higher.quot;

Silver was the best performer in the speculative free-for-all
in metals. March silver hit a 5-1/2 year high at $6.30 an
ounce and closed at $6.245, up 28 cents, or 4.7 percent.

quot;It's the same story as gold, except that silver is a lot less
liquid, so it went a lot further,quot; said a floor broker. quot;It was
all fund buying around.quot;

Spot silver was quoted at $6.14/16 an ounce, up from
Wednesday's New York close for the year at $5.93/95 and
Monday's fix in London at $5.975.

Silver, because of its wide uses in electronics and
photography, is also considered an industrial material
and benefited from the strong rally in base metals.

quot;You get a little support from its friend copper,quot; said a New
York precious metals trader. quot;Gold actually might be
rallying on the back of silver here, which is a reversal of
roles.quot;

Copper hit a 6-1/2-year highs as expanding economies in
the United States, China, and elsewhere depleted
inventories of base metals needed for construction and
making consumer goods.

NYMEX April platinum shot up $31.20 to $842.50 an
ounce. Spot last fetched $838.00/843.00. The metal,
used in jewelry and catalytic converters, was buoyed by
hopes for improving car sales but stayed under recent highs.

March palladium rose $7.30 to $204.80 an ounce. Spot
was quoted at $199.50/205.50.

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