Singapore: Gold struck another record high on Friday as the dollar weakened against the euro, while silver hit a 31-year high after ETF holdings rose peaked on inflation worries driven by a surge in oil prices.
A strong aftershock in Japan on Thursday initially put pressure on the Nikkei, but investors turned their attention to the prospect of more declines in the dollar following the European Central Bank’s first rate hike since 2008.
Spot gold rose as high as $1,465.56 an ounce, a record high, with an increase in SDPR holdings offering additional support.
“Maybe there is some dollar-related buying because it’s weakening. People see the ETF increasing a bit, so they want buy some gold,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“There’s a small amount of physical buying. Jewellers are covering short, but it’s a very small amount. Everybody is looking for a new high, maybe $1,500 or $1,600.”
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust , said its holdings rose to 1,217.209 tonne by 7 April, their highest since mid-March, from 1,205.467 tonne on 6 April.
Spot gold is poised to rise to $1,477 per ounce based on its wave pattern and a Fibonacci projection analysis, according to Wang Tao is a Reuters market analyst for commodities and energy technicals.
Spot silver hit an intraday high of $39.95 an ounce, its strongest since 1980, as rising oil prices boosted its appeal as a hedge against inflation and a cheaper alternative to bullion.
IShares Silver Trust said its holdings hit another record at 11,192.80 tonne by April 7 from 11,162.45 tonnes on 4 April.
US gold futures for June hit $1.467.50 an ounce, another record high.
The euro rose to its highest level in almost 15 months against the dollar on Friday as a mildly firmer risk environment from higher equity markets and rising oil prices boosted flows into the single currency.
The European Central Bank raised interest rates for the first time since the 2008 financial crisis on Thursday and signalled it was ready to tighten policy further if needed to check rising prices.
ICE Brent crude on Friday surged to a 2-1/2-year high above $123 a barrel as unrest in Libya and the Middle East offset a major aftershock in Japan.
A strong performance from major retailers pushed up Tokyo stocks by nearly 1 percent after April options prices were seen settling higher than expected, offsetting the impact of a major earthquake which rocked northeast Japan the night before.
“I would say the quake has little impact, but we do see selling from the physical market which cuts the premium,” said a dealer in Tokyo, referring to sales of gold bars as bullion price rose.
Gold bars were offered at a discount of 25 cents to the spot London prices, having been quoted on par earlier this week.
India gold demand erodes on price rise
Indian gold rose on Friday tailing gains in the overseas markets and squeezing demand in the local spot markets as consumers were struggling to digest higher levels, dealers said.
At 4:43pm, the most-active gold for June delivery on the Multi Commodity Exchange was trading 0.59% higher at Rs 21,303 per 10 grams.
“Demand was negligible. Buyers were waiting for correction. No one was in hurry to buy at current level,” said a dealer with a state-run bank that imports bullion.
In India, wedding season is under way, when parents give gold jewellery to their daughters as part of their trousseau.
International gold hit record highs on Friday and silver its strongest since early 1980 as the dollar slid to 15-month lows versus the euro, with concerns over euro zone debt and unrest in the Middle East region further supporting buying.
The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, rose on Friday, limiting the gains in the bullion.
India’s demand for gold should be robust in 2011 despite the likelihood of higher prices, pushed by geopolitical tensions, according to the World Gold Council.