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Gold, Silver Jump on Safe-Haven Demand, Profit-Seeking

Gold and silver both experienced growth in trading on Friday, and their parallel movement was partly due to different reasons. By noon CST on Friday the gold spot price had risen about $7 to $1391 while silver was up $0.28 and past the key technical support level of $22 to $22.13 per ounce.

Gold and silver started the day “behind the 8 ball” due to a slightly stronger dollar. However, losses were soon reversed after Fed chairman Ben Bernanke has reportedly planned to publicly refute rumors that the Fed’s quantitative easing policies will soon slow down or cease. Gold and silver both perked up at this news, as a 0.15 percent gain was seen in both gold and silver immediately after the Bernanke news was released.

Gold then rose on safe-haven demand as news came out that gold production was flat in May. This caused physical gold buying to soar as security-seeking investors flooded the marketplace. Silver, on the other hand, rose not due to safety-based buying but on short-term profit-seeking, mostly by a handful of the largest institutional buyers. Silver’s push past the $22 mark was viewed as pivotal by analysts, who now predict that silver could stay above $22 even if gold fails to reach $1400 within the next few days.

Gold has struggled to remain at or near the $1400 mark since it initially fell below that mark in mid-April. Physical demand has been sky-high for months but a lack of interest in gold ETFs by household investors, as well as uncertainty on the part of institutional investors, has held gold below the vitally important price marker of $1400 per ounce.

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