Daily Gold Update

Source: Reuters

New York— Investment fund buying sparked by strong demand for bullion and talk of a new silver exchange-traded fund boosted U.S. silver futures to a five-week high on Friday in pre-holiday trading, while gold rose on a weaker U.S. dollar.

Metals trade on the New York Mercantile Exchange was shuttered early, at about noon, and U.S. financial markets will be closed on Monday for the Memorial Day holiday.

July silver futures on the NYMEX's COMEX division rose 14.8 cents, or 2 percent, to end at $7.31 an ounce — its loftiest close since April 22 — after dealing within a $7.12-to-$7.315 range.

"Silver is continuing to lead the precious metals complex," said David Meger, an analyst at Alaron Trading in Chicago, who noted steady investment fund interest over the past few days despite mostly static currencies and gold.

A late jump in spot silver prices above $7.25 an ounce and expectations for fresh investor interest from a metal-backed security helped boost futures in late trading.

On Wednesday, silver industry sources said Barclays Global Investors plans to file for registration seeking regulatory approval for a silver ETF within two months, which is seen attracting new small investors and money managers alike.

"Speculation about tightness and speculation about the ETF from Barclays prompted some buying yesterday, and that has triggered fund stops (stop-loss buy orders)," said a COMEX floor broker.

Spot silver was at $7.27/30, up from $7.13/16 at Thursday's close. Friday's London fix was at $7.17.

Gold climbed from the three-month lows hit this week as the dollar eased and traders covered some short positions.

New benchmark August gold futures rose $1.80 to $422.40 an ounce, after trading from $420 to $422.80. June gold also was up $1.80, ending at $419.80.

Much of the business on the floor this week was switches by noncommericals rolling June gold positions into August before the June contract's first notice day on Tuesday.

Spot gold ended at $419.80/420.30, above Thursday's New York close at $417.90/8.60. The London afternoon fix was at $418.25.

"Physical demand should continue to support gold around $416-417 over the coming week, although with (demand from) the Indian wedding season drawing to a close that will begin to erode," said analysts at TheBullionDesk.com in a report.

"The market remains dollar-dependent, though, with traders waiting to see if France's decision on the EU constitution will crack (euro) technical resistance at $1.2490," the report said.

The dollar eased from this week's seven-month high against the euro, although the euro stayed in check by expectations France will reject the EU constitution in a vote on Sunday. The euro rose to $1.2581 by midafternoon.

A firm dollar makes dollar-denominated commodities more expensive for investors holding foreign currencies.

In NYMEX metals, July platinum was up $3.80 at $864.70 an ounce. Spot platinum reached $861/865.

Newly most active September palladium rose $1.20 to $186.65 an ounce. June palladium rose $1 to $184.35. Spot traded to $184/188.