Gold Hits New 25-Year High
NEW YORK – Gold futures surged to a new 25-year high on a falling dollar and worries over Iran's atomic program on Friday, and the rally spilled over to silver, which was already firmer after a launch of a new silver-backed fund.
Strong oil and base metals prices and uncertainty over the U.S. economy fueled waves of aggressive investor buying across the precious metals group, dealers said.
"I think gold has kind of taken on a leadership role," Steve Platt, a broker with Archer Financials in Chicago, said, adding that the yellow metal also was benefiting from a weak dollar.
"People for a long time had not been interested in the precious metals to any big degree, but now you have started to see them look at them once again as a flight to quality in terms of asset diversification," Platt said.
June delivery gold was up $16.70, or 2.55 percent, at $653 per ounce on the New York Mercantile Exchange's COMEX division by 12:11 p.m. EDT, trading in a range of $634 to $655.50, a new contract high.
Spot gold hit a 25-year high at $652.80 an ounce.
"After a period of consolidation, and with $650 cleared, gold could now be set to challenge $680 as tensions in the Middle East draw investors toward gold's safe-haven qualities," said James Moore, an analyst with TheBullionDesk.com.
A report by the United Nations' nuclear watchdog said Iran had ignored a U.N. Security Council call to suspend all nuclear fuel enrichment by a Friday deadline and had accelerated its program, diplomats said.
Oil prices rose 1.5 percent to $72.05 per barrel after the Iran news — not far from a recent record peak above $75.
The dollar slumped to an 11-month low against the euro after a mixed bag of U.S. data did little to overturn the market's view that the Federal Reserve is nearing a pause in its dollar-boosting interest rate campaign.
The economy grew at a steady clip of 4.8 percent in the first quarter — its fastest pace in 2-1/2 years and in line with forecasts — but inflationary pressures in the data were softer than expected, analysts said.
U.S. consumer sentiment, meanwhile, fell in April as worries about high gasoline prices overshadowed a buoyant stock market and strong job growth.
Silver, which is used in jewelry, fabricated products and industrial applications, surged almost 9 percent at one point but held shy of last week's 23-year peak of $14.69.
July delivery silver was up $1.06, or 8.4 percent, at $13.65 an ounce. The morning's high was at $13.70.
Barclays Global Investors' ETF, called iShares Silver Trust, with the trading symbol SLV (AMEX:SLV - news), began trading on the American Stock Exchange on Friday.
Each share is worth 10 ounces of silver bullion.
More than 1.6 million shares had traded on Amex by midday.
"It's trading very strongly, and it's only noon," said a source at the exchange. "Volume might reach 3 million or 4 million shares today."