Gold and silver prices rose on Wednesday as investors continued to worry about inflation and how the United States (US) and Europe will deal with their ongoing financial problems.
Gold settled at $1 498,90 an ounce, its seventh consecutive day of gains. Silver settled at $44,461 an ounce, its sixth straight gain. Other metals and energy prices were mostly higher while grains and beans were mixed.
Precious metals attract investors during uncertain economic times because of their reputation as relatively stable assets.
Investors are still uneasy after Standard & Poor’s said on Monday it could lower its rating on US government debt unless Washington is able to control its budget deficit, which is projected to be about $1,5-trillion this year.
Other issues include the impact that inflation may have on the global economy and Europe’s efforts to solve financial problems in Portugal and other countries.
Lind-Waldock senior market strategist Phillip Streible has predicted gold will hit $1 650 an ounce by year end, but much will depend on what happens after the Federal Reserve’s $600-billion bond-buying program, which began in November, ends in June.
Other rising prices
A strong rally in commodities prices began in late August after Federal Reserve chairperson Ben Bernanke hinted that the central bank may buy government bonds to help stimulate the economy. That caused the dollar to weaken, sending more investors into commodities in a search for profits.
Most commodities also benefited on Wednesday from a weaker dollar. Since commodities are priced in dollars, a weaker dollar makes them more of a bargain for buyers using other currencies.
In other metals trading, copper for May delivery rose 11c to settle at $4,3395 a pound, July platinum rose $31,50 to $1 802,80 an ounce and June palladium rose $27,80 to $758,90 an ounce.
Oil prices rose nearly 3% after the government reported an unexpected drop in US crude supplies. Benchmark crude for June delivery rose $3,17 to settle at $111,45 per barrel on the New York Mercantile Exchange.
In other Nymex trading for May contracts, heating oil added 6,29c to settle at $3,2214 per gallon, gasoline increased 4,42c to $3,2773 per gallon and natural gas gained 4,8c to settle at $4,31 per 30 cubic metres.
Grains fell while beans settled higher. In May contracts, wheat fell 0,75c to settle at $7,85 a bushel, corn fell 16,25c to $7,3275 a bushel and soybeans rose 15,75c to $13,5775 a bushel. — Sapa-AP