Spot gold breaches $1,500; silver at 31-year high

Spot gold prices breached USD 1,500 for the first time and silver hit a 31-year high on Wednesday, supported by a weak dollar and concerns over a sovereign debt crisis in the euro zone.

Lofty oil prices, inflation concerns, worries over the euro zone sovereign debt crisis as well as political tensions in places like the Middle East should keep gold strong for the time being, analysts said.
"There is not a great deal of reasons to sell it at the moment, apart from concerns that there are a lot of longs in the market and there is a risk of sell-off at some point," said Darren Heathcote, head of trading at Investec Australia.
Spot gold rose to USD 1,500.16 an ounce before easing slightly to USD 1,499.10 by 0513 GMT, up 0.4%. US gold futures rose to a record of USD 1,500.90.
The dollar index, a measure of the greenback against a basket of currencies, softened towards its 16-month low hit last week, boosting the appeal of gold in non-dollar denominated currencies.
Technical analysis also points to a further rally in gold targeting USD 1,518, according to Reuters market analyst Wang Tao.
Some market watchers see gold consolidating at its current level as it waits for the next reason to push higher.
"I don't see prices convincingly past that level in the next few days unless we see something very negative, probably related to the euro zone sovereign debt. But we do see gold very well supported at the USD 1,490 level," said Natalie Robertson, commodities strategist at ANZ.
Fears over a potential downgrade of the US credit rating eased after US Treasury Secretary Timothy Geithner tried to reassure investors the country's two parties were making progress on reducing the deficit, she added.

Silver hits 31-year high

Silver continued to charge ahead, rising to a 31-year high for the fifth consecutive session, as investors continued to favour gold's less expensive cousin.
Spot silver rose to USD 44.34, a level unseen since 1980, before easing slightly to USD 44.25, up 0.8%.
Analysts and traders expected silver to continue to shine, as investors favour the metal, which benefits both from safe haven demand and growing industrial consumption.
"Silver is still in a clear bull trend that targets USD 50.00 next," said Taso Anastasiou, a UBS technical strategist.
He said the medium-term trend was bullish, but warned that silver might go through a correction in the near term as the metal has been overbought.
"My key medium-term support level lies at USD 33.00 and while it is difficult to identify what would cause silver to sell off aggressively, there is an increased chance we will see a correction towards the USD 35.00 to USD 33.00 area."
The Relative Strength Index on spot silver rose to above 84, a level unseen since February 2008, indicating a heavily overbought market.