Gold firm, silver at 30-year high

Spot silver reached a new 30-year high and gold was firm on Monday, after disappointing U.S. payrolls data underpinned hopes of more stimulus from the Federal Reserve and spurred interest in precious metals.

The U.S. economy shed jobs for a fourth straight month in September, hit by government layoffs and slower private hiring.

“In the short term, gold will still look at the economic picture. If economic data turns out weaker than expected, it will raise expectations of quantitative easing, which will be positive for gold,” said Ong Yi Ling, an analyst at Phillip Futures.

Continuous weakness in the U.S. dollar also lends support to bullion. The dollar slid to 15-year lows versus the yen Monday as soft jobs data fueled expectations of more quantitative easing, while the IMF and G7 meetings produced nothing to avert a cycle of competitive depreciation.

Spot gold rose 0.7 percent to $1,353 an ounce by 0335 GMT. It hit an all-time high of $1,364.60 last week.

U.S. gold futures for December delivery were up 0.7 percent at $1,354.1.

Gold may rise to $1,367 an ounce, as a bullish pennant has been confirmed, said Wang Tao, a Reuters market analyst.

For a graphic of the 24-hour gold technical outlook, see:

here

Gold output in China, the world’s largest gold producer, fell 11 percent on the month to 27.655 metric tons in August, but total production in the first eight months gained 8.85 percent from a year earlier.

“Physical demand is on the rise, as investors swarm into the gold market, betting on a further price rally,” a Beijing-based trader said, but added that the rising Chinese yuan has been curbing the rise in domestic gold prices.

China’s central bank set the yuan’s daily mid-point against the dollar at a record high on Monday.

Spot silver rose to a new 30-year high of $23.65 an ounce, before easing to $23.45, gaining nearly 40 percent so far this year, outperforming gold’s 23 percent rally.

“As long as gold prices hold firm, prices of other precious metals, such as silver, will actually outpace gold, thanks to increasing investment interest,” said Ong of Phillip Futures.

“For silver, we are also likely to see increasing demand on the physical side from emerging economies, such as China, both on industrial and investment sides.”

The gold-silver ratio, used to measure how many ounces of silver are used to buy an ounce of gold, dropped to its lowest in more than two years.
Source: Reuters