Gold rose and silver surged 4 percent on Wednesday, as rallying crude oil and grain prices and lingering worries about a European debt crisis lifted precious metals in a commodity rally. Bullion is now heading for its biggest one-day gain in over a week, snapping a three-day losing streak, boosted by inflation concerns due to strong growth and easy monetary policies and a retreat of the dollar's strength.
"There has just been a general pick-up in stocks and other commodities and it looks as though there is a bit of a resumption of the bull trend," said ANZ head of metal sales Peter Hillyard. Spot gold rose 0.9 percent to $1,498.70 an ounce by 12:40 p.m. EDT (1640 GMT). US gold futures for June delivery rose $18.40 an ounce to $1,498.40.
The Reuters-Jefferies CRB index, a global benchmark for commodities, was set for its biggest gain in two months as buyers emerged for oil and other raw materials cheapened by the sell-off of the last fortnight. Silver was last up 4.3 percent on the day at $35.345. Silver has outperformed gold for a second day, bringing the gold/silver ratio - which shows how many ounces of silver an ounce of gold can buy - to 43 Wednesday from near 45 on Monday.
After a recent decline, holdings of the world's biggest silver exchange-traded fund, iShares Silver Trust, rose by nearly 150,000 ounces on Tuesday, but investors' sentiment towards the metal remains wary after its sharp price correction. Gold prices are still down over 4 percent this month, with investor sentiment towards the precious metal turning more cautious as gold holders worried it may struggle to rise significantly after hitting record highs this month.
Premiums for gold bars in Asia increased slightly from a week earlier, as buyers from China and elsewhere in the region took advantage of a dip in prices to buy physical materials. Among other precious metals, platinum was up 0.5 percent at $1,770, while palladium rose 2 percent to $734.50. Palladium prices have risen 4 percent so far this week as miners, refiners, analysts, traders and end-users of the platinum group metals meet in London for Platinum Week.
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