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Gold hits record on inflation fear; silver at 31-yr high

Spot gold hit a record high and silver rose to a 31-year high on Monday, fuelled by concerns of rising inflation globally, and as a lingering euro zone sovereign debt crisis continued to boost safe-haven demand in precious metals.

April 18, 2011 / 11:35 AM IST

Spot gold hit a record high and silver rose to a 31-year high on Monday, fuelled by concerns of rising inflation globally, and as a lingering euro zone sovereign debt crisis continued to boost safe-haven demand in precious metals.


Spot gold hit a record of USD 1,488.50 an ounce, before easing to USD 1,484.29 by 0252 GMT. US gold futures were nearly flat at USD 1,486.60.


"It wouldn't be a surprise to see gold push higher in the current environment," said Darren Heathcote, head of trading at Investec Australia, adding that investors were concerned about inflation, especially when oil prices remain high.


US crude futures headed lower on Monday below USD 109 a barrel after three days of gains, but had gained nearly 20% this year.


Inflation accelerated in Asia and Europe in March while the United States bucked the global trend with underlying price pressures largely in check, leaving monetary policy on diverging paths around the world.


The lingering euro zone debt crisis also helped lift gold prices.


Technical analysis indicated that gold may target USD 1,518 an ounce, said Reuters market analyst Wang Tao.


Reflecting growing investment interest, holdings in the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, jumped 1.5% to a nearly three-month high of 1,231.159 tonnes.



Silver rises to 31-year high


Spot silver rose to 31-year highs for the third consecutive session, hitting USD 43.34 an ounce. It was trading at USD 43.28.


"Silver's rally has been dumbfounding," said a Tokyo-based trader. "Bears are very weak now after silver has steadily climbed from under USD 30 to USD 43 in less than two months."


But he said that investors' enthusiasm had eased slightly since silver breached above the USD 40 threshold last week.


Holdings in the world's largest silver-backed exchange-traded fund, iShares Silver Trust , gained 0.64% to 11,044.07 tonnes by April 15, down 1.5% from a week earlier.


Gold-silver ratio, used to measure how many ounces of silver is needed to buy an ounce of gold, fell to below 35, its lowest since the early 1980s.


It compares to an average of 65 over the past three decades. But the ratio could drop further as investors continue to favour silver.

Spot silver has rallied 40% so far this year, making gold's 4.6 percent gain negligible.

first published: Apr 18, 2011 10:40 am

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