With a NYMEX price of $861.30/oz, gold broke a 28-year record Wednesday as oil smashed through the $100 barrel barrier. Gold stocks and platinum also benefited from the price surge.
Author: Dorothy Kosich
Posted: Thursday , 03 Jan 2008

RENO, NV - Gold was the first commodity in the New Year to set a new record, hitting $861.30/oz on the NYMEX to break a 28-year record as news of manufacturing sector declines, combined with $100 a barrel oil, boosted gold and other commodities.
Shares of top gold miners also hit records, as oil prices briefly hit $100 a barrel for the first time.
Spot platinum also hit a record Wednesday of $1,548 an ounce before ending at $1,538/oz at the end of the trading day. March silver rose to $15.32 an ounce, while copper gained 2.2 cents to $3.06/lb.
The record high gold and oil prices propelled gold company stocks higher Wednesday. Shares of the world's largest gold producer, Barrick, hit a record US$46 on the NYSE and Cdn$45.65 on the TSX.

Kinross Gold also exceeded its record high of Cdn$20 a share by 12-cents on the TSX. Goldcorp shares rose nearly 8% on the NYSE to end the day at US$36.64/sh. Number two gold producer Newmont saw its shares rise 7.29% on the NYSE, closing at US$52.39/sh.
Bad news from the manufacturing sector, a weakening U.S. dollar and geopolitical unrest also prompted investors to find a haven in commodities. Mario Innecco, a futures broker at MF Global in London, told Bloomberg that "funds are probably allocating money into the precious metals sector" for investments this year.
Gavin Graham, Chief Investment Officer at the Guardian Group of Funds, told Canadian Business Online that the price increases in gold stocks indicates that investors realize that higher gold prices are not "just a blip."
The Financial Times reported that Standard and Poor's GSCI commodity index generated a 32.7% return for 2007, its best year since 2001.
The Institute for Supply Management Wednesday reported that the U.S. factory sector shrank last month for the first time in a year. The ISM index declined to 47.7% in December, the lowest since April 2003. The new orders section of the index-considered an indicator of production and employment-fell from 52.6% to 45.7%, the lowest level since October 2001.
Ian Shepherdson, chief U.S. economist doe High Frequency Economics, called it a "seriously weak report." Stephen Stanley, Chief Economist at RBS Greenwich Capital, said the report was unsettling but was "inclined to wait a month and see what the January figures look like before tossing the manufacturing sector onto the trash heap." BMO Capital Market Economist Sal Guatieri called the details of the report "abysmal," suggesting that U.S. manufacturers are giving in to the housing/credit crunch crisis.
The report also raised questions about a possible Fed interest rate cut and expressed fears that the U.S. could slip into a recession.
Meanwhile, light, sweet crude oil futures for February briefly hit the milestone of $100 a barrel on the NYMEX, breaking the previous record of $99.29 set in November. By the end of the day, oil came to rest at $99.62.
A series of events--including a cold winter in the U.S., poor Gulf of Mexico weather slowing Mexican oil exports, declining oil inventories, and political strife-prompted speculators to buy oil futures. Armed militants in Nigeria Tuesday killed 13 people in the main oil industry center of Port Harcourt.
On Wednesday, the Bush Administration announced it would not release oil from the 694-million barrel Strategic Petroleum Reserve to lower prices. In fact, the Bush administration is considering adding to the petroleum reserve.
In the meantime, the U.S. government will release its weekly report today on oil supplies, which analysts believe will reveal a seventh consecutive week of decline