Gold shot up almost $8 an ounce Wednesday, and platinum soared to a more than 23-year high on speculation that an economic recovery will boost demand for cars and jewelry, the two biggest uses for the metal.
“The speculators are running with the ball, kicking it, catching it and running with it some more,” said Andy Smith, commodities analyst with Mitsui Global Precious Metals.
Platinum for immediate delivery finished up $19, or 2.8 percent, to $710.50 an ounce in London after earlier hitting $712, its highest level since March 1980. Platinum is used mainly in jewelry and auto catalytic converters.
Gold for December delivery rose $7.30, or 2 percent, to $374.10 an ounce, on the New York Mercantile Exchange, the highest closing price for a most-active contract since Feb. 5 and biggest one-day gain since July 23.
A decline in the dollar against the euro boosted gold by making the dollar-priced metal cheaper for buyers using other currencies. Further declines in the dollar are likely as the U.S. takes steps to trim a record deficit, investors said.
“Somebody has to finance the deficit,” said Heinz Thoma of Global Strategic Management in Annapolis, Md. “The Fed is ready to print more dollars, and at some point people will have too many dollars and want to diversify into gold.”
Thoma said gold may reach $400 an ounce by the end of the year.
