Strong Japanese buying helps push ore to near 18-year highs The price of gold was just below US$500 an ounce yesterday, with Japanese buyers helping to push the precious metal to 18-year highs. Gold prices have been rising steadily since early last month as worries about inflation and political stability make it attractive as a safe haven for investors. Japanese buyers in particular have diversified away from stocks, bonds and currencies because of low interest rates and the weak yen. 'Gold could well break that US$500 level sometime this week and one of the main reasons for this has been Japanese buying,' said Yingxi Yu, a precious metals analyst at Barclays Capital. Ms Yu said low interest rates, a weak yen and strong technical indicators were spurring Japanese buying interest. Gold rose to a high of US$499.10 in Asian trading yesterday for a gain of 9.24 per cent this month. In New York late morning trading, it stood at US$495.20 as investors returned from their long holiday weekend. Gold last topped US$500 in December 1987 and its record high of US$873 an ounce was set in January 1980. 'In many parts of Asia we've seen physical premiums [over the futures market] declining to zero and there's evidence of scrap selling in many parts of Asia. They're selling off old jewellery as they cash in on the high prices,' Ms Yu said. Soaring prices had hurt demand in India, a key consumer of gold, as well as across the rest of Asia, she said. Ellison Chu, a manager of precious metals at Standard Bank Asia, said although gold demand remained solid, prices could take a step back from their historical highs before further gains. 'I expect there to be a lot of selling around US$498 to US$502,' Mr Chu said, adding the market could drop to US$480 if US investors did not show the same appetite as the Japanese. '[High prices] will make producers and central banks rethink selling forward contracts and it will hurt physical demand, especially in the Far East because most jewellery sold is in this area,' he said.