By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Gold and silver prices rallied further in electronic trading on Wednesday, spurred by a weakened dollar and uncertainty surrounding the euro-zone’s debt troubles.
Gold futures for delivery in August GCQ2 +1.14% climbed 0.6%, or $9.40, to $1,626.30 an ounce in Tokyo late afternoon trading, after finishing 0.2%, or $3, on the Comex division of the New York Mercantile Exchange overnight.
July silver futures SIN2 +2.85% , meanwhile, climbed 1.2% to $28.75 an ounce, further stretching its strong rally after climbing 1.4% overnight.
The precious metals’ advance came as the ICE dollar index DXY -0.34% , a measure of the dollar’s performance against a basket of six major global currencies, dropped to 82.561 from 82.801 in North American trading.
A weaker dollar tends to support prices of commodities such as gold by making the metal cheaper for holders of other currencies. Read Currencies report.
Still, demand for gold could be weakening in large gold importing nations such as India, where prices of the metal are close to a record high in the local currency, particularly after the rupee’s slump against the greenback in the past several months.
HSBC analyst James Steel wrote in a note to clients that at close to 90,000 rupees USDINR +0.1996% an ounce in local currency terms, gold prices were just 1% below the record high of 91,045 rupees seen in November.
“This may present headwinds to any further rallies and curb Indian import demand,” he said.
The precious metals’ advance also came ahead of a European Central Bank meeting later in the day on monetary policy. Read ECB preview.
Elsewhere in the metals complex, July contracts for copper HGN2 +2.02% and platinum PLN2 +1.51% rose by 1.3% to $3.33 per pound and by 0.5% to $1,447.10 per ounce, respectively.
Palladium futures for delivery in September PLN2 +1.51% , meanwhile, advanced 0.6% to $623.35 an ounce.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
