Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures edged higher and silver soared 2% Monday as oil prices at 30-month highs stoked fears of inflation and helped fuel investment demand for the precious metals. Gold for June delivery added $4.10, or 0.3%, to $1,433 an ounce on the Comex division of the New York Mercantile Exchange. Silver for May delivery climbed 76 cents to settle at $38.49 an ounce, the latest in a string of 31-year highs. The metal had bounced off $38 an ounce in recent weeks. As it broke through that ceiling, more investors came to the market in hopes of $40 an ounce in the short term, said Jeffrey Christian, managing director of commodities consulting firm CPM Group in New York. Silver past $38 is �very expensive,� he added. The average cost of metal at primary silver mines was $5.06 an ounce last year, four times what silver futures averaged in 2010, Christian said.

Production costs for most of silver being sold are even lower as the majority of the metal in the market comes as a byproduct of gold and copper mining, he added. Spot silver traded at $50.35 an ounce in mid-January 1980 according to CME Group, which owns Comex. At current prices, however, physical buyers are sitting out, he said. Their buying on the dips, however, will continue to sustain the uptrend for gold, Kryuchenkov said. The gains in gold and silver �have possibly set the tone for the week, with both metals again rising on safe-haven and inflation hedging after [West Texas Intermediate crude oil recently] touched a fresh 2�-year peak,� analysts at TheBullionDesk said in an overnight note to clients. See full story.