Gold prices at 28-month high

(First Edition)

GOLD prices climbed to their highest levels in 28 months yesterday, driven by continued speculative euphoria.

In London prices surged from the opening after a sharp overnight rise in New York and hit a peak of dollars 384.50 an ounce. But they fell back to dollars 381.90 for the afternoon fix, up dollars 11.40 from the previous day, and closed at dollars 380.

Overheated after its recent steady rise, gold began to retreat as reports of selling by producers in South Africa and Australia crept into the market, prompting nervous profit-taking by speculators who hold large interests in the metal.

Platinum rose dollars 6.50 to dollars 392.50 an ounce and silver advanced 13 cents to dollars 4.76, both following gold.

'It's more than a blip and almost a bubble,' said Andrew Smith, precious metals analyst with Union Bank of Switzerland, of gold's 16 per cent ascent, which began in the middle of last month. 'It is becoming a bit self-fulfilling now.'

Technical chart watchers say gold could charge through the dollars 400 mark soon, but analysts such as Mr Smith think the bubble could burst when the big, high-profile speculators who led the rally in April run for cover.