Gold climbs for a third day; silver gains
Gold climbs for a third day; silver gains
London/Singapore: Gold rose for a third day in New York as concern about Europe’s debt woes spurred demand for precious metals as a protection of wealth. Silver also gained.
Standard and Poor’s on Monday downgraded Greece’s credit rating for the fourth time since April 2010, rekindling concerns that the region’s debt crisis is escalating. Silver extended its rebound after dropping into a bear market last week.
Economic uncertainties in the monetary union and fears over peripheral debt were returning to the focus yet again, Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report to clients. In the short run, bullion is likely to remain well-supported, also helped by physical activity picking up in Asia amid seasonal demand.
Gold for June delivery rose $12.80, or 0.9%, to $1,516 an ounce by 7.57am on the Comex in New York. Prices declined 4.2% last week after climbing to a record $1,577.40 on 2 May. Immediate-delivery gold was 0.2% higher at $1,516.50 in London.
Bullion rose to $1,517.25 an ounce in the morning fixing in London, used by some mining companies to sell output, from $1,502 at Monday’s afternoon fixing.
S&P lowered Greece’s credit rating to B from BB- on Monday, saying that further reductions are possible. Another cut would make Greece the lowest-rated nation in Europe. European Central Bank Executive Board member Lorenzo Bini Smaghi said allowing a euro-area member state to default on or restructure its debt would create more difficulties than it solves.
Silver futures slumped 27% on the Comex last week, the worst weekly drop since at least 1975, as investors sold commodities from oil to copper and exchange owner CME Group Inc. increased the cost of making new speculative positions. The metal slid as much as 34% since reaching a 31-year high of $49.845 an ounce on 25 April. A bear market is defined by some investors as a decline of 20% or more.
Silver for July delivery gained 3.6% to $38.46 an ounce on the Comex. The metal for immediate delivery was 1.6% higher at $38.4675 in London. Spot prices touched a record $49.79 on 25 April.
The bounce in silver is not too surprising as there’s a strong market appetite to buy anything on the dip, Mark Pervan, commodity analyst at Australia and New Zealand Banking Group Ltd in Melbourne, wrote in a note. The downgrading of Greece reaffirms the reason why investors require the safe-haven support of the precious metals market.
Silver assets held in exchange-traded products (ETP) fell for a sixth day on Monday, dropping 1.2%, to a six-month low of 14,191.21 tonnes, Bloomberg data show.
Bloomberg
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