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NEW YORK ( TheStreet ) -- Gold and silver prices popped to highs Wednesday as safe haven buyers jumped into the market. Gold for April delivery added $10.40 to close at a record $1,438 an ounce at the Comex division of the New York Mercantile Exchange. The gold price was close to a new intraday high touching $1,441.20 an ounce, just $4 shy of its old record. The spot gold price was rising $9.80, according to Kitco's gold index. "Close, although not the all time gold highs, are primarily driven by some inflation on all global fronts and again attention to Portugal, Ireland and other problems that are economic, not just geopolitical," argues George Gero, senior vice president at RBC Capital Markets. Portugal's parliament was nearing a vote on austerity measures, which if defeated, would result in the resignation of the prime minister, leaving the country leaderless for a few months. The result could push borrowing costs through the roof as Portugal tries to avoid a bailout. "What could derail all this," says Gero, "is a rise in interest rates in the future, changing currency values and the high crude prices dampening growth." The Bank of England also held rates low for March, but three members voted in favor of a rate hike. Inflation is at 4.4% and could exceed 5% later in 2011. Gero argues that silver is set to outperform gold as a safe haven metal and an industrial metal. Silver certainly shined Wednesday as prices rose 92 cents to a 31-year record settle of $37.19 an ounce after hitting $37.29 intraday.
"I think there are enough reasons to stay long in the market" for gold and silver says Brian Booth, senior market strategist at Lind-Waldock, who sees $42 silver. As silver keeps closing above recent 31-year highs, traders will become more interested in the metal as it has "proved" its ability. Gold could benefit from the same momentum trading on Thursday as traders digest its new record.
For silver it's a general demand ... silver is the popular one."
"Gold demand ... leads silver," says Moffatt, "but when you are seeing $1,400 gold and $35 silver, $35 silver looks a lot more attractive." Moffett is still seeing gold selling from Japan as owners of the metal trade in gold for cash, but says that the continuing conflict in the Middle East and North Africa should keep safe haven demand strong.
it's the world's number one producer, producing 340 tons of gold a year. You don't see any of that coming out of China. You see a lot of gold going into China." Moffatt believes that its central bank is a prominent buyer. Reuters also reported Wednesday that China Gold International is in talks to buy five or six gold mines overseas. China Gold is 42% owned by China National Gold Corp, China's biggest state owned gold miner, which has been recently buying gold concentrate from companies like Coeur d'Alene Mines ( CDE). Gold mining stocks , a risky but profitable way to buy gold, were popping. Kinross Gold ( KGC) was 1.64% higher at $16.13 while Goldcorp ( GG) was adding 2.78% to $49.52. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO) were trading at $69.05 and $16.36, respectively.
-- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel. >To follow the writer on Twitter, go to http://twitter.com/adsteel. >To submit a news tip, send an email to: email@example.com.