Gold off highs as Powell demands action in Iraq
news.ft.com By Nerma Jelacic in London Published: February 5 2003 12:26 | Last Updated: February 5 2003 16:33
Gold prices slipped off their highs in Wednesday afternoon trade as Colin Powell, the US secretary of state, presented his case against Iraq to the United Nations' security council.
Earlier in the day the commodity soared to its highest level in more than six years as investors searched for safety amid heightened fears of the inevitability of a US-led war with Iraq.
In his address, Mr Powell claimed that Saddam Hussein, the Iraqi president, had made no effort to disarm "as required by the international community".
"How much longer are we willing to put up with Iraq's non-compliance, before we as a council, as the United Nations say, 'enough, enough'," he said.
Gold was quoted at $380 a troy ounce in London, down from the morning fix of $385 a troy ounce but still up from the previous session's fix of $376.55 an ounce. Wednesday morning's fix was the highest since September 1996.
The spot market gold price reached a high of $388.50 an ounce, up from levels around $378.65 in New York trade on Tuesday.
The commodity has gained more than $10 this week and 12 per cent since the beginning of this year. Gold, traditionally a safe-haven asset in times of uncertainty, was also helped by a weakening in the dollar. The dollar fell close to a four-year low against the euro on Wednesday.
Investors also looked for safety in oil markets, pushing Brent crude futures for March delivery up 37 cents to $31.46 per barrel on London's International Petroleum Exchange, off a high of $31.60.
Reports that Opec is considering reducing its output added to the bullish pressure on the crude price.
Iran's oil minister said on Tuesday that if Iraq and Venezuela sustain production the cartel would have to cut output in the second quarter.
Crude oil has made some hefty gains on the back of the twin uncertainties of war in the Gulf and the threat of disruption to exports from the oil-rich region, and the 63-day general strike that crippled Venezuela's exports.