NY silver soars nearer to $11/oz, other precious up
NY silver soars nearer to $11/oz, other precious up Mon Mar 27, 2006 5:15 PM GMT
NEW YORK, March 27 (Reuters) - U.S. silver futures rallied to a new 22-year high on speculative buying early Monday amid expectations of rising silver demand, pushing the other precious metal higher as well, dealers said
Riding silver's coattails, palladium jumped to a two-year high, platinum scaled a six-week peak and gold rose to a three-week high.
Record copper prices and a shaky dollar were also supportive to the complex, while investors awaited clues on the Federal Reserve's policy outlook after an expected rate increase at a two-day meeting that ends on Tuesday afternoon.
By 10:27 a.m. EST, May delivery silver <SIK6> on the New York Mercantile Exchange's COMEX division was up 19.5 cents, or 1.82 percent, at $10.93 an ounce, a contract peak and the highest for futures since September 1983. The morning's low was $10.72.
"Will $11 prove a correction pivot? More likely, the next stiff resistance lies somewhere above $12," Greg Weldon, independent analyst and publisher of the Metal Monitor, said.
Silver surged for a fifth straight session on hopes that a silver-backed investment vehicle will soon launch and create greater investment interest in the gray metal.
The U.S. Securities and Exchange Commission last week seemed to clear the way for final approval of the first exchange-traded fund that tracks the metal's price.
Credit Suisse said the price could climb further in the medium term, to $15, hoisted by increased consumer and investment demand due to the ETF. <nL27683982>
Monday's fresh buying held down the gold/silver ratio, the number of ounces of silver needed to buy one of gold, which is a bullish technical signal for silver.
The ratio remains below 52 to 1, versus 58:1 at the end of February and 60:1 late last year.
Fund positioning in COMEX silver futures has increased in the latest week, according to closely watched U.S. Commitments of Traders data from the Commodity Futures Trading Commission.
The fund net long exposure rose to 53,901 lots as of March 21, from 51,189 lots one week earlier.
Spot silver <XAG=> rose to $10.92/10.95, from Friday's late New York quote at $10.72/75. London bullion dealers fixed the daily spot reference rate 2 percent higher at $10.8950.
"Resistance above is now pegged at $10.90 and $11, and I continue to believe silver has the potential to reach $12, once ETF trade actually begins," James Moore, an analyst with TheBullionDesk.com, said in a note.
COMEX April gold <GCJ6> gained $7 to $567.50 an ounce, dealing from $558.90 to $568 -- its highest since March 6.
Spot gold <XAU=> rose to $566.60/567.50 an ounce, versus Friday's late quote in New York at $560.00/0.90. Monday's afternoon fix in London hit $565.
Closes above $570 in futures and bullion would help validate the recent precious metals rally and could pave the way for fresh highs, said traders and analysts.
TheBullionDesk said a more positive mood in gold this week may help the metal's price to $568, and possibly above there.
"The outcome of the FOMC's meeting tomorrow will have a large bearing on gold's direction, but oil costs and rising investor interest in commodities, particularly the precious metals, looks set to drive gold to $600 later in the year."
Contract rollover was increasing, with speculative players transferring more positions into next-active June futures out of April before delivery begins next month.
The dollar was barely changed against the euro Monday.
U.S. currency weakness often supports gold as the dollar-priced commodity becomes cheaper for traders using foreign currencies. The correlation has loosened considerably in the last six months, however.
The Commodity Futures Trading Commission said the fund net long position in COMEX gold rose to 104,264 lots by last Tuesday, from 95,940 lots a week earlier.
At NYMEX, June palladium <PAM6> jumped $8.95, or 2.7 percent, to $343 an ounce -- the highest on the spot weekly charts since April 2004.
"There's a lot of spec buying and little in the way of trade selling. There's good demand for the metal, and I think we're going to $400," said Rocky D'Esposito at RJ Futures.
Spot palladium <XPD=> hit $339/344.
April platinum <PLJ6> surged $20.40 to $1,072 an ounce. Spot platinum <XPT=> was up at $1,067/1,071.
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