NEW YORK (Dow Jones)--Gold and silver futures extended their unprecedented rally Thursday, with both metals finishing at record highs after data showed U.S. economic growth slowed while prices for gasoline and food rose.
The metals have gained for 10 out of the past 11 sessions, with Thursday's jump coming as investors sought a hedge against inflationary pressures as well as a safe place to park cash after separate data revealed U.S. jobless claims unexpectedly jumped.
Gold and silver were building on strength as the U.S. dollar fell on the back of assurances Wednesday by Federal Reserve Chairman Ben Bernanke that low interest rates will remain a feature of U.S. policy for an "extended period."
"The Fed gave gold and silver buyers a green light," said Michael Gross, a broker and futures analyst with OptionSellers.com. "You've seen investor euphoria today as they expect a lower dollar."
The most-actively traded gold contract, for June delivery, rose $14.10, or 0.9%, to settle at a record $1,531.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby May gold jumped $14.20, or 0.9%, to settle at a front-month record $1,530.80.
Silver posted another huge price swing, rising 3.4% as astonishing volatility continued while investors flocked to its relatively small market to take advantage of the metal's much lower price than sky-high gold. Front-month May silver, which is also the most-actively traded contract, surged $1.562 to settle at a record $47.520 a troy ounce.
Shortly after gold closed, the ICE Futures U.S. Dollar Index was down 0.4%. The weaker buck helped dollar-denominated gold and silver throughout their trading sessions by making them less expensive for foreign buyers, boosting demand.
Both metals have been supported for months by the combination of ultralow interest rates--which boost the allure of the noninterest-bearing metals--and Fed purchases of Treasurys to stimulate the economy. The extraordinarily easy monetary policy has caused some to believe the central bank won't be able to sop up extra liquidity in time to avoid problematic consumer- and producer-price increases over the longer term. Easy monetary policy has also helped spur gold and silver to records by encouraging speculators to pile into the precious metals.
In an unprecedented press conference Wednesday following a two-day meeting by the Federal Open Market Committee, Chairman Bernanke reiterated the Fed's decision to keep its low interest rates for the foreseeable future while maintaining its $600 billion bond buying program until completion in June.
Investors interpreted the announcements as indicating further weakness in the dollar and the prospect of higher-than-usual inflation, even though U.S. core inflation, which strips out food and energy prices, has been subdued.
That prompted aggressive buying in gold and silver, and investors kept up their purchases Thursday as government data showed U.S. gross domestic product, the value of all the goods and services produced, rose at an inflation-adjusted annual rate of 1.8% in the first quarter. That marked a significant slowdown from the economy's pace in the fourth quarter, when GDP rose by 3.1%, as higher energy and food prices pushed an inflation measure that's closely watched by the Fed up to 3.8% in the first quarter.
Meanwhile, the precious metals were also shining as a safe-haven play after government figures showed the number of idled U.S. workers filing new claims for unemployment benefits unexpectedly jumped last week, in the latest sign that the labor market remains weak.
Initial jobless claims increased by 25,000 to a seasonally adjusted 429,000 in the week ended April 23. Economists had forecast claims would fall by 8,000.
"The weaker GDP number and the weak jobs report are very indicative of an economy slowing down," said Sterling Smith, an analyst with Country Hedging. "This is creating the perception that we are going to see continued easy monetary policy in hopes of improving our economic performance."
Other precious metals also gained Thursday, with Nymex July platinum rising 1.1% and June palladium on the exchange advancing 2.3%.
Source: http://online.wsj.com
The metals have gained for 10 out of the past 11 sessions, with Thursday's jump coming as investors sought a hedge against inflationary pressures as well as a safe place to park cash after separate data revealed U.S. jobless claims unexpectedly jumped.
Gold and silver were building on strength as the U.S. dollar fell on the back of assurances Wednesday by Federal Reserve Chairman Ben Bernanke that low interest rates will remain a feature of U.S. policy for an "extended period."
"The Fed gave gold and silver buyers a green light," said Michael Gross, a broker and futures analyst with OptionSellers.com. "You've seen investor euphoria today as they expect a lower dollar."
The most-actively traded gold contract, for June delivery, rose $14.10, or 0.9%, to settle at a record $1,531.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby May gold jumped $14.20, or 0.9%, to settle at a front-month record $1,530.80.
Silver posted another huge price swing, rising 3.4% as astonishing volatility continued while investors flocked to its relatively small market to take advantage of the metal's much lower price than sky-high gold. Front-month May silver, which is also the most-actively traded contract, surged $1.562 to settle at a record $47.520 a troy ounce.
Shortly after gold closed, the ICE Futures U.S. Dollar Index was down 0.4%. The weaker buck helped dollar-denominated gold and silver throughout their trading sessions by making them less expensive for foreign buyers, boosting demand.
Both metals have been supported for months by the combination of ultralow interest rates--which boost the allure of the noninterest-bearing metals--and Fed purchases of Treasurys to stimulate the economy. The extraordinarily easy monetary policy has caused some to believe the central bank won't be able to sop up extra liquidity in time to avoid problematic consumer- and producer-price increases over the longer term. Easy monetary policy has also helped spur gold and silver to records by encouraging speculators to pile into the precious metals.
In an unprecedented press conference Wednesday following a two-day meeting by the Federal Open Market Committee, Chairman Bernanke reiterated the Fed's decision to keep its low interest rates for the foreseeable future while maintaining its $600 billion bond buying program until completion in June.
Investors interpreted the announcements as indicating further weakness in the dollar and the prospect of higher-than-usual inflation, even though U.S. core inflation, which strips out food and energy prices, has been subdued.
That prompted aggressive buying in gold and silver, and investors kept up their purchases Thursday as government data showed U.S. gross domestic product, the value of all the goods and services produced, rose at an inflation-adjusted annual rate of 1.8% in the first quarter. That marked a significant slowdown from the economy's pace in the fourth quarter, when GDP rose by 3.1%, as higher energy and food prices pushed an inflation measure that's closely watched by the Fed up to 3.8% in the first quarter.
Meanwhile, the precious metals were also shining as a safe-haven play after government figures showed the number of idled U.S. workers filing new claims for unemployment benefits unexpectedly jumped last week, in the latest sign that the labor market remains weak.
Initial jobless claims increased by 25,000 to a seasonally adjusted 429,000 in the week ended April 23. Economists had forecast claims would fall by 8,000.
"The weaker GDP number and the weak jobs report are very indicative of an economy slowing down," said Sterling Smith, an analyst with Country Hedging. "This is creating the perception that we are going to see continued easy monetary policy in hopes of improving our economic performance."
Other precious metals also gained Thursday, with Nymex July platinum rising 1.1% and June palladium on the exchange advancing 2.3%.
Source: http://online.wsj.com
No comments:
Post a Comment