Silver prices rise more than 5% as the dollar dips
By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures climbed by more than $20 an ounce Wednesday to trade in record territory, supported by investment demand as European contagion fears lingered and the U.S. Federal Reserve hinted at further economic stimulus.
Gold for August delivery GC1Q +1.54% added $20.20, or 1.3%, to $1,582.50 an ounce on the Comex division of the New York Mercantile Exchange.
Prices marked a settlement record of $1,562.30 on Tuesday. They’ve gained nearly $80 an ounce over the past six winning sessions.
The Fed is examining several untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed Chairman Ben Bernanke said Wednesday in remarks prepared for the House Financial Services Committee. Read more of Bernanke’s remarks.
Bernanke’s comments “hint at inevitable emergency techniques in the face of various treasury-auction situations and credit-rating events,” said Richard Hastings, a macro strategist at Global Hunter Securities. So, “the tone is growing darker and gold, of course, is lighting up against this ominous background.”
The gains among the metals were stronger for silver Wednesday, with the September contract SI1U +7.38% adding $2.27, or 6.4%, to $37.90 an ounce.
Precious metals have benefitted from safe-haven buying on mounting concern that Europe’s sovereign-debt crisis will spread beyond Greece.
Late Tuesday, Moody’s Investors Service downgraded Ireland’s debt to speculative, or junk, status, sparking a selloff in U.S. stocks. Read more about Ireland.
European-debt concerns “are certainly driving gold back up to test its old record highs,” said David Combe from Commodity Broking Services in Sydney, but a rise in the U.S. dollar would cap further gains.
On Wednesday, he U.S. dollar index DXY -1.17% , which measures the U.S. unit’s performance against a basket of six other major currencies, dropped to 75.260 from 75.589 ahead of Bernanke’s speech. It was at 76.028 late Tuesday in North American trading.
A weaker greenback encourages investment in dollar-priced commodities including metals.
Big silver moves
Silver prices, meantime, remain around 25% off record highs.
“Silver’s long-term price ratio between gold and silver is a lot wider than it normally is, and we should see silver want to catch up with gold, or gold come down to a more normal ratio level,” Commodity Broking Services’s Combe said.
Metals investors were also weighing up the latest print on the Chinese economy Wednesday. China expanded a fraction faster than expected in the April-to-June quarter, while other data released Wednesday suggested domestic conditions remain relatively upbeat. Read more about China’s GDP.
“There’s a little bit of cooling in China, but no cause at this stage to think there is any sort of demand that is going come off. [Gross domestic product] numbers are still pretty respectable,” Combe said.
The broader metals complex traded higher Wednesday along with gold and silver.
September copper HG1U +0.89% added 4 cents, or 0.9%, to $4.43 a pound.
Platinum for October delivery PL1V +2.16% rose $30.70, or 1.8%, to $1,767 an ounce, while the September contract for palladium PA1U +3.01% , platinum’s sister metal, gained $20.80, or 2.7%, to $788.25 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Virginia Harrison is a MarketWatch reporter based in Sydney.
