Gold hits record, silver jumps on weak greenback

US silver futures leapt as much as 6 per cent and gold futures reached a record high, underpinned by a weakened dollar after the US Federal Reserve signalled no rush to reverse its accommodative monetary policy.

The dollar index, a measure of the greenback’s strength against a basket of currencies, declined to a three-year low following Fed chief Ben Bernanke’s remarks that the central bank would not scale back its support for the economic recovery any time soon.

“Gold has followed the misfortunes of the dollar,” said Darren Heathcote, head of trading at Investec Australia.

“It looks very difficult to find a reason to sell gold right now, and technically we are targeting $1550. Bulls are very much in control of this market at the moment.”
US gold futures rose to a record high of $US1530.80 an ounce, before easing slightly to $US1528.10, up 0.7 per cent.
Spot gold matched the record high of $US1529.90 hit in the previous session. It had since trimmed gains to $US1527.29 an ounce, little changed from the previous close.
“Gold is still bullish, with the QE2 (second round of quantitative easing) to be completed on schedule and interest rates to stay low until at least end of the year,” said a Hong Kong-based dealer.
“Unless we see the job market turn around quickly, interest rates will stay low for a long time.”
On the data radar on Thursday is US gross domestic product. The forecast is that growth slowed to a 2 per cent annual rate or even less, according to a Reuters survey, after a 3.1 per cent fourth quarter pace.

US silver jumped as much as 6 per cent to $US48.75 an ounce earlier in the day, then softened to $US48.55. Spot silver rose by 1.6 per cent to $US48.52, extending gains made in the previous session.
It hit a 31-year high of $US49.31 on Monday. Holdings in the iShares Silver Trust , the world’s largest silver-backed exchange-traded fund, extended losses from the previous session, down 1.8 per cent to 11,053.20 tonnes.

Spot silver has gained 57 per cent so far this year, compared to gold’s 8 per cent ascent. The surging demand for physical silver, especially in Asian countries, has helped support its recent rally.
Reuters.

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