* Momentum drives gold to record high above $1,164
* Asian stocks firmer, led by Australian resource stocks
* Oil, copper boosted by weaker dollar, supply worries
(Repeats to more subscribers)
By Lincoln Feast
SINGAPORE, Nov 23 (Reuters) - Gold powered to another
record high on Monday, benefiting from its reputation as a
hedge against inflation and sluggish economic growth, while oil
and copper prices rose on a weaker dollar and supply concerns.
European stocks were set for a firmer start following gains
in Asian shares, which were led by Australia thanks to higher
resource stocks, although volumes were light with Japan out on
holiday.
Many investors have been reducing their positions and
cutting risk as a strong year begins to wind down and with
economic indicators still showing scant evidence of a sustained
recovery.
Highlighting the growing concerns evident in the market,
yields on U.S. 2-year Treasuries <US2YT=RR> have fallen below
0.75 percent, approaching levels seen at the height of the
financial crisis in December last year.
"It worries me that two-year yields are trading as they are
plus (short-dated) bill rates went negative and gold is bid,
bid, bid," said Robert Rennie, chief currency strategist at
Westpac.
"It makes me think there is a huge flight to quality going
on that hasn't hit FX yet...perhaps a bit of a warning sign."
The dollar, which often rises in times of increased
uncertainty and worries about global growth, gave up early
gains to slide 0.5 percent against a basket of currencies
<.DXY>, while the commodity-linked Australian dollar <AUD=>
benefited from the strong gold price.
Spot gold <XAU=> surged to a peak above $1,165 an ounce,
extending gains to about a third so far this year.
Helped by its safe-haven allure and purchases by a number
of central banks, gold has shot higher since the start of
November, hitting a succession of record highs and gaining more
than 12 percent in the past three weeks.
STOCKS STALLED
The heightened sense of caution has stalled a rally in
global stocks, which have traded in a broad range since
mid-October.
After falling last week, MSCI's index of Asia-Pacific
stocks outside of Japan <.MSCIAPJ> rose 0.7 percent, taking its
gains so far this year to almost two-thirds.
Australian shares <> rose 0.6 percent, with shares of
Drillsearch Energy Ltd <DLS.AX> jumping more than 19 percent
after the company reported a promising oil find.
Financial bookmakers expected major European indexes to
open between 0.6 and 0.8 percent higher on the back of stronger
commodity prices, snapping a four-session losing streak. []
Crude oil futures <CLc1> rose 1 percent to $78.24 a barrel,
supported by heightened tensions between Iran and Western
nations which raised speculation of a potential supply risk.
[]
Iran's armed forces launched large-scale air defence war
games on Sunday to show off the country's deterrence
capabilities in the face of pressure from the West over its
nuclear programme, and a cleric in the Revolutionary Guards
warned that the Islamic Republic would fire missiles at "the
heart of Tel Aviv" if attacked. [] []
"There's always a supply risk premium that can arise from
these elevated tensions in the Middle East and that is a factor
pushing up oil prices this morning," said Toby Hassall, a
commodities analyst at the Commonwealth Bank of Australia.
Supply concerns have also supported copper <MCU3>, which
rose to a 13-month high last week.
Workers at Chile's Spence copper mine voted early on Monday
to end a 42-day strike, defusing fears of wider output
disruptions after agreeing a wage deal with owner BHP Billiton
<BHP.AX> <BLT.L>, their union leader said. []
Three-month copper on the London Metal Exchange <MCU3> rose
$115 or 1.7 percent to $6,960 a tonne. []
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((For the state of play of Asian stock markets please click
on: <>))
(Editing by Kim Coghill)
((lincoln.feast@reuters.com; +65 6870 3832; Reuters Messaging:
lincoln.feast.reuters.com@reuters.net))
