MW: Gold, silver rally as dollar sinks after EU bank plan
By Polya Lesova and Virginia Harrison, MarketWatch
NEW YORK (MarketWatch) — Gold futures rallied on Friday, as the U.S. dollar sank against other major currencies after European leaders put forward a plan to stabilize the region’s banking sector.
Gold for August delivery GCQ2 +2.88% surged $46.80, or 3%, to $1,597.20 an ounce on the Comex division of the New York Mercantile Exchange.
Metal futures shot higher, along with other commodities and equities, after euro-zone leaders unveiled a series of measures aimed at bringing stability to the region’s financial markets. Read more on Asia stocks
A marathon meeting concluded with European Council President Herman Van Rompuy outlining a proposal for a single supervisory mechanism for Europe’s banking system and a plan to directly recapitalize the region’s banks. Read more on the EU plans.
The greenback fell sharply, spurring buying in dollar-denominated commodities, which dollar weakness makes cheaper for holders of other currencies.
The ICE dollar index DXY -1.41% , a measure of the greenback’s performance against a basket of six major global currencies, dropped to 81.514 from 82.849 in North American trade late Thursday.
“Gold and the other precious metals are making a strong recovery from yesterday’s lows this morning, doubtless on the back of a much weaker U.S. dollar in the wake of the EU summit,” Commerzbank said in a note.
In other trading, July silver futures SIN2 +5.42% soared $1.42, or 5.4%, to $27.67 an ounce. Read more on silver's recent weakness.
Copper for July delivery HGN2 +3.82% gained 13 cents, or 4%, to $3.46 per pound. Platinum for July delivery PLN2 +2.56% added $40.30, or nearly 3%, to $1,426.70 an ounce. September palladium futures PAU2 +2.05% rallied $14.65, or 2.6%, to $578.55 an ounce.
Polya Lesova is MarketWatch's New York deputy bureau chief.
Virginia Harrison is a MarketWatch reporter based in Sydney.
