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Bellwether Gold Futures Contract Hits More Than 18-Year High

Posted on: Friday, 7 April 2006, 15:00 CDT

By Kyodo News International, Tokyo

Apr. 7--TOKYO -- The bellwether gold futures price rose to its highest in more than 18 years on the Tokyo Commodity Exchange on Friday amid speculation that the economy may be in for inflation.

The closing quote of the contract for settlement in February 2007 soared to 2,286 yen per one gram, the highest since Aug. 14, 1987, when the corresponding futures contract set a high of 2,326 yen.

Trading on the Tokyo bourse carried over the previous day's momentum in New York trading, where the gold price shot up to $600 per ounce, hitting the level for the first time in 25 years.

Traders noted speculative funds continued to stream into the commodity markets amid a glut of surplus investment funds, creating upward pressure on the prices of such commodities as crude oil, silver and copper in addition to gold.

Gold prices posted sharp gains last year against the backdrop of such factors as greater demand for the precious metal in China and India where gold has been enjoying greater consumer demand for use in jewelry.

Although gold prices had failed to post sizable additional gains since the onset of 2006, they have begun to advance anew in light of recent sharp gains in crude oil prices, the traders said.

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Copyright (c) 2006, Kyodo News International, Tokyo

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Source: Kyodo News International, Tokyo

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