Friday, 8 April 2011

Gold hits fresh record; silver tops $40 an ounce

By Nick Godt and Claudia Assis , MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures traded at fresh record levels and silver topped $40 an ounce Friday, with investors chasing the safety of precious metals as turmoil in the Middle East lifted crude-oil futures above $111 a barrel, while the euro jumped and the dollar sank.

Gold for June delivery /quotes/comstock/21e!f:gc\m11 (GCM11 1,471, +11.40, +0.78%) was up $11.40, or 0.8%, at $1,470.70 an ounce on the Comex division of the New York Mercantile Exchange. It earlier tapped a high of $1,474.50 an ounce. Gold on Thursday settled at a record close of $1,459.30 an ounce, after hitting a intraday high of $1,466.50 an ounce.

Silver has also been climbing alongside gold recently. Silver for May delivery /quotes/comstock/21e!f1:si\k11 (SIK11 4,022, +66.80, +1.69%) , which has settled higher the past four sessions, gained 70 cents, or 1.8%, to $40.26 an ounce.

The run among precious metals has followed that in oil futures, which traded above $111 a barrel on Nymex, amid supply concerns from oil-rich countries in or around conflict zones throughout the Middle East and North Africa.

“Gold continues to draw support from the ongoing geopolitical uncertainty ... dollar weakness, elevated oil prices, concerns over inflation and .... Portugal’s request for financing from the European Union,” analysts at Barclays Capital wrote in a research note.

Citing World Gold Council data, the Barclays note said Portugal holds 81% of its reserves in gold.

On Thursday, the European Central Bank also hiked interest rates, lifting the euro and putting pressure on the dollar.

A weaker dollar tends to lift the price of dollar-denominated commodities.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 75.06, -0.53, -0.70%) , which compares the U.S. unit to a basket of six currencies, traded at 75.072 versus 75.553 late Thursday in North American trading. Read more about currencies.

The euro climbed to its highest level against the dollar since January 2010 as investors feared a potential U.S. government shutdown. Government operations are funded through Friday at midnight, and would partially shut down Saturday morning without a spending deal. Read about what would be shut down in a government shutdown .

Nick Godt is a MarketWatch reporter based in Mumbai. Claudia Assis is a San Francisco-based reporter for MarketWatch.

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