Gold, Silver Advance, Building On Weekly Gains
Gold futures rose and silver futures pushed higher in electronic trade Monday, extending gains from last week that left silver with its strongest performance in about five years.
Gold for December delivery improved by $9.30, or 0.7%, to $1,380.30 an ounce.
Silver for September delivery tacked on 16 cents, or 0.7%, to $23.47 an ounce.
“Precious metals have witnessed a strong spell of buying” as gold last week traded above the “crucial resistance” of $1,365 an ounce, and silver prices rose well above $23 an ounce, said analysts at IIFL on Friday.
“Weakness in the greenback has provided lot of cushion to the precious pack,” they wrote.
Softness in the U.S. dollar can help spur buying of gold and other dollar-denominated commodities, as it makes them less expensive for holders of other currencies to purchases.
Gold futures last week finished 4.5% higher, the best gain since July 12, according to FactSet. Meanwhile, silver surged 14%, the biggest weekly percentage rise for a most-active contract since the week ended Sept. 19, 2008.
Analysts have said silver’s bounce drew support by recent data indicating improvement in the global economy, which could boost industrial demand for silver. At the same time, gold prices have been aided by short-covering and investors seeking safe-haven assets.
“We reiterate that the precious metals will head higher during the course of [the next] few weeks, aided by a weak greenback and tensions in the Middle East,” said IIFL. “However, gold and silver prices may scale back gains as we approach the most awaited U.S. Federal Reserve meeting in September, whereby the longevity of the bond-buying program will be ascertained.”
The U.S. central bank is widely expected to trim its buying of $85 billion a month in assets, with policy makers pointing to improvement in the economy as a reason for the likely move.
Minutes from the Fed’s policy meeting in late July may shed more light on the taper timing, including information on how many policy makers were ready to slow asset purchases. The minutes are due out Wednesday.
In the Middle East, an escalation of violence over the past week between security forces and supporters of ousted Egyptian president Mohammed Morsi has left more than 900 dead, according to media reports. International tensions can sometimes support safe-haven buying of gold.
In other metals trading Monday, October platinum fell $5.90, or 0.4%, to $1,521.70 an ounce.
September palladium lost $1.95, or 0.3%, to $761.10 an ounce, and copper for September delivery shed 1 cent, or 0.2%, to $3.35 a pound.
Source : Marketwatch
