Gold jumped to an all-time high above $1,450 an ounce on Tuesday, as new peaks for crude and corn prices fanned inflation fears and Portuguese credit downgrade drew attention back to eurozone woes. Bullion rose more than 1 percent, its biggest gain after a month of range-bound trading, while silver soared to a 31-year peak.
Both drew support from Federal Reserve Chairman Ben Bernanke's comments late on Monday suggesting he was committed to completing a $600 billion stimulus program as scheduled in June. On technical charts, gold broke above a double-top technical formation around $1,440 an ounce. This added to a rush of buying triggered by news that Portugal's leading banks threatened to stop buying government debt hours after a Moody's downgrade.
"What it shows is that big money continues to believe gold will go higher...because Bernanke wants to grow at any cost," said Axel Merk, portfolio manager of the $600 million Merk Mutual Funds. "The other reason for gold to go up is that there was a downgrade in Portugal, so people realise there are still some issues."
Spot gold was up 0.9 percent to $1,449.65 an ounce at 12:50 am EDT (1650 GMT), off the session high, a record $1,452.34 an ounce. US gold futures for June delivery rose 1.3 percent to $1,451.50 in decent trading volume. "There has been aggressive selling between the $1,438 and $1,441 level over the course of the past several weeks. Once gold got through $1,441 an ounce, the pressure was off," said investor Dennis Gartman, publisher of the Gartman Letter.
Silver gained 1.8 percent to $39.12 an ounce, after hitting a session high of $39.19. That was the highest since the Hunt Brothers cornered the market in the early 1980s, when silver briefly hit a record of just below $50 an ounce. Silver has outperformed gold in recent months, rising 22 percent in the first quarter compared with gold's 0.7 percent. The gold:silver ratio, which shows how many silver ounces are needed to buy an ounce of gold, fell to a 28-year low at 37.3.
Gold is also benefiting from concerns that some smaller eurozone economies such as Portugal and Ireland will keep struggling with sovereign debt, and from jitters over Western air strikes in Libya and unrest in the Middle East. Earlier in the session, gold fell in tandem with other commodities after China raised interest rates for the second time this year. For platinum group metals, platinum rose 0.7 percent to $1,791.99 an ounce, while palladium also gained 0.8 percent to $785.97.
Comments
Comments are closed for this article.