GOLD and silver futures rose sharply largely on safe-haven buying as equities sold off, with short covering triggered June gold gained $US19.60 to $US887.50 an ounce on the Comex division of the New York Mercantile Exchange. May silver rose US31.5c to $US12.105. “The stock market is under a lot of pressure. There’s a flight to precious metals,” said Patrick Lafferty, commodity trading advisor with MF Global. The Dow Jones Industrial Average closed down 3.6 per cent to 7841.73 amid continuing worries about the financial sector. George Gero, vice president with RBC Capital Markets Global Futures, commented that investors uneasy about the equity declines took advantage of the recent pullback below $US880 an ounce to pick up gold again. “This is significant as the dollar is up, crude is down, and gold is still attracting buyers,” he said. Some analysts also cited stronger traditional physical demand in Asia lately, such as jewellery, as a factor underpinning prices. June gold is right around initial resistance around $US889 to $US900, Mr Lafferty said. He put minor resistance in May silver at $US12.15 to $US12.20, with more significant resistance at $US12.50. Earlier in the year when stocks sold off, investors often turned to gold in a flight-to-safety play. In the current environment, much of the buying also appears to be from traders covering short positions as the metal rebounds, Mr Lafferty said. “The recent trend had been down,” he said. “People were getting nervous staying in too long, especially when the volatility picked up in the stock market or anything else that could possibly cause some alarm. They are quick to jump out.”

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