Gold and silver prices shot higher after the dollar sank to its lowest level against the euro on Friday in off-hours trading here, analysts said. The open-outcry futures market was closed this day after the US Thanksgiving holiday.
The December gold contract at the Comex division of the New York Mercantile Exchange jumped $10.6 to trade at $639.60 an ounce at 9:53 am EST (1453 GMT), dealing from $629 to $640.50. Spot gold was indicated at $639.40/0.40 at 9:55 am, against the late New York quote on Wednesday of $629.90/630.90.
Silver prices also rocketed higher, with December delivery soaring 45 cents to $13.49 an ounce, moving from a contract low of $13.045 to $13.495. Spot silver was indicated at $13.44/3.51 from the New York quote on Wednesday of $13.04/13.11. The catalyst for the rally was the plunging dollar as it sank to a 1-1/2-year low against the euro as worries flared over central banks diversifying their reserves and the greenback's narrowing yield versus other currencies.
"The currency is very weak. It was a reflection of the fears of diversification," said Steve Platt of Archer Financial Services in Chicago of the dollar. That, in turn, sucked in safe haven buying for both gold and silver. Gold often moves in the opposite direction from the dollar and is also widely viewed as a hedge against inflation.
On the geopolitical front, the trade took note of worsening conditions in Iraq after the bloodiest bomb attack that killed 202 in a Shiite area on Thursday. Platt said there is even more concern about Lebanon after the murder of a Christian minister stoked fears of renewed strife in a country that went through a bloody civil war from 1975 to 1990.
Silver was also boosted by strong "underlying demand" for the metal, according to Platt, and the increasing perception that a stronger global economy will boost the appetite for the white metal.
Analysts said the market could well explode to even higher ground after the Thanksgiving break when many major players return to the market on Monday when business resumes after the Thanksgiving holiday closures on Thursday and Friday.
Comments
Comments are closed.