Spot silver reached $6.76 an ounce in London on Tuesday, its highest level since April 1998, as strong bullion and the euro persuaded funds to buy into silver.
The euro climbed back over $1.28 on Tuesday, a reaction to European Central Bank President Jean-Claude Trichet passing up an opportunity to express concern about the euro's strength on Monday, delayed by the closure of US markets on Monday for Presidents Day public holiday.
"Funds are just buying anything that is priced in dollars," said Societe Generale analyst Stephen Briggs, who saw no new fundamentals for silver.
"We are just in a bull market and pretty much everything is going up indiscriminately, but silver because it has both the base metal and the precious metal story on its side."
"Silver is outperforming gold because it is being dragged up not just by bullion - which is in turn simply because of the dollar - but also because we are seeing new highs on the base metals, particularly copper," said Briggs.
Copper went over $2,840 on Tuesday, hitting an eight-year high, with other base metals also in bullish form.
By 1639 GMT silver had eased from its high to $6.72/6.74 a troy ounce but was still comfortably above the previous close in London of $6.56/6.58. The euro had also pared some of its earlier gains, quoted at $1.2838/1.2842.
Spot gold held above $410 all session, feeding off a weaker dollar to break $415 briefly, but bounced off resistance around $416. It was quoted at $414.20/414.70, still up from Monday's European close of $411.40/412.20 and almost five dollars higher than the previous close in New York of $409.85/410.55 on Friday.
"Frankly gold is still not that interesting, it is just a currency story really," said Briggs. "The driving force is still the dollar."
A weaker dollar makes gold cheaper for holders of other currencies and, although it said it expected bullion to track the dollar, Dresdner Kleinwort Wasserstein saw the rally as a tamed bull in the near term.
"Our forex strategists anticipate the greenback to hold in a $1.24-1.29 range over the coming weeks though; that clearly would limit the fantasy in the gold market as well," it said in a daily report.
Platinum was at $857.00/862.00 from a London previous of $849.00/854.00, having hit $859.00 earlier in the session, its highest level since January 28.
Palladium was at $240.00/244.00, up from London's Monday close of $238.00/243.00.
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