Gold, silver rebound as dollar weakens

AP News
Posted: Jun 29, 2011 5:09 PM
Gold, silver rebound as dollar weakens

Gold and other precious metals settled higher Wednesday after a drop below technical trading levels brought out buyers. Energy prices rose and grain prices were mixed.

A weakening of the dollar also pushed up the price of gold, which many investors see as an alternative to holding dollars. The dollar fell against the euro after Greece moved closer to securing new emergency loans needed to avoid a debt default. Greece's debt crisis has been weakening confidence in the euro.

Gold for August delivery rose $10.20 to settle at $1,510.40 an ounce Wednesday. July silver rose $1.112 to settle at $34.750 an ounce.

Buyers moved in this week after gold dipped below $1,500 and silver fell below $34. Analysts said many investors have been waiting for prices to get below those thresholds before buying.

Demand for gold and other precious metals remains strong, partly because of political wrangling that is holding up an agreement on raising the debt limit for the United States, said Carlos Sanchez, analyst with CPM Group in New York, a commodities research and consulting company. Gold prices tend to rise when investors expect disruptions in other financial markets, as would certainly be the case if the U.S. edged anywhere close to a default on its debt.

Sanchez said buying for gold and silver picked up this week after both metals fell to the lower end of their recent trading range, prompting investors who had been waiting to buy to make their move. Silver also fell to $34 in the middle of May, but then too buyers came out and pushed the price as high as $38 by May 31. Silver is still up 12.5 percent for the year.

July copper rose 11.75 cents to settle at $4.2095 a pound and October platinum rose $33.10 to $1,726.60 an ounce. September palladium rose $16.75 to $751.90 an ounce.

Agricultural prices were mixed. Corn for December delivery fell 2.5 cents to settle at $6.505. November soybeans rose 4 cents to $13.23 a bushel. September wheat rose 2.5 cents to $6.7425 bushel.

A government crop report due out Thursday is expected to show declines in the amount of farmland planted with corn and wheat.

Benchmark crude for August delivery rose $1.88 to settle at 94.77 per barrel on the New York Mercantile Exchange.

In other Nymex contracts, heating oil rose 9.32 cents to settle at $2.9347 per gallon, gasoline rose 11.93 cents to $2.9349 per gallon and natural gas fell 3.9 cents to $4.334 per 1,000 cubic feet.