Gold rose over 1 percent and silver surged on Thursday, as a combination of dollar weakness, inflation worries and renewed Greek sovereign debt worries lifted bullion to $5 below its record high. Gold got a boost from inflation worry triggered by data showing rising US core producer prices in February, and as higher-than-expected jobless claims knocked the dollar.
Silver jumped nearly 3 percent toward 31-year highs on strong investment buying, sending the gold/silver ratio to a low. "The combination of higher oil prices, weaker dollar and the resurrection of discussions of Greek sovereign risk problems has galvanized the gold market. It's particularly impressive because we ran into selling above the market yesterday," said James Steel, chief commodity analyst at HSBC.
Spot gold rose 1.1 percent to $1,471.09 an ounce by 1:19 pm EDT (1528 GMT), within striking distance of its record $1,476.21 set on Monday. US gold futures for June delivery gained $16.50 to $1,472.10 an ounce. Investors grew jittery on talk of debt restructuring by Greece, the first eurozone member to receive a bailout a year ago in the crisis that has driven Ireland and Portugal to seek aid and forced draconian budget cuts in Spain.
The European debt crisis has boosted gold this year and also helped power the metal's 30 percent gain last year. Bullion investors took heart as the dollar fell and further losses were seen as likely, hurt by reported by central bank selling amid a backdrop of low US interest rates that were not expected to rise any time soon. Gold prices have almost doubled since the Fed cut interests rates to the bones in 2008 to shock the economy back to life after the worst financial crisis since the Great Depression.
Silver climbed 2.5 percent to $41.62, near a 31-year high at $41.93 an ounce. "There is still a lot of speculative, investment money coming into the gold market. Until there is a clear technical signal that the situation is reversed, the momentum of silver remains intact," Steel said.
Silver has rallied about 35 percent year to date on talk of near-term supply tightness as a recovering global economy boosted demand for the industrial metal. Holdings of the largest silver ETF, the iShares Silver Trust, slipped to 10,969.71 tonnes on Wednesday from 11,212.53 tonnes a day before. For platinum group metals, platinum gained 1 percent to $1,787.49, while palladium rose 1.2 percent to $769.47.