Reuters Market News
Early COMEX silver jumps to 18-month high over $5/oz
NEW YORK, May 31 (Reuters) - COMEX silver topped the psychological $5 an ounce level for the first time in a year and a half early on Friday, riding the coattails of the safe-haven rally in gold, which toyed with $330 overnight.
"Gold's up, so silver's up," said a bullion dealer. "It's poor man's gold."
In electronic trade before the New York open outcry session started, active July silver (0#SI:) rose to $5.07, its highest since Dec. 7, 2000. August gold (0#GC:) hit a contract high at $330.20, at the same time as spot was fixed in London at its strongest in almost five years.
July silver at 0904 EDT (1304 GMT) was up 3.0 cents at $5.015. Silver fixed at $5.045 in London, a 23-month high and spot (XAG=) was last at $5.01/03, up from $4.96/98 late Wednesday.
Pre-placed buy orders were triggered as professional traders and speculators chased the market above $5.
But dealers said gold and silver business was light after New York got going.
Silver is considered as much an industrial commodity as a precious metal. It is widely used in electronics and photography, and with so much uncertainty about the strength of the U.S.economic recovery, the list of fundamental reasons for its rally was short, dealers said.
That is not the case in gold. It has seen its price rise $50, or 17 percent, this year on the back of super-low U.S. interest rates, "hedge" buy backs by gold producers, the weak dollar and stock market, terrorism threats and escalating fears that the border between nuclear powers India and Pakistan was a powder keg ready to blow.
August gold was up $2 at $328.70, and support is now at $325.
Both India and Pakistan again exchanged artillery and mortar fire across their front line on Friday. Pakistan is considering moving troops from its Afghan border in the West to face the Indian army in the east -- a step that could hinder the U.S.-led offensive against remnants of al Qaeda and Taliban forces.
The United States and Russia stepped up efforts to pull the arch rivals back from the brink of war as President George W. Bush warned Islamabad it must keep its promise to stamp out cross-border incursions by Islamic militants seeking to wrest Kashmir from India.
The dollar hit a 15-month low against the euro and a six-month low on the yen on Thursday, before steadying Friday after the Bank of Japan intervened to prevent yen appreciation that might choke off exports and a nascent recovery from its 10-year economic slump.
Precious metals and most other commodities are priced in dollars in international markets, so a strengthening of the euro and yen gives overseas investors more gold and silver purchasing power.
But in Japan, which led the gold rally early in the year, investors were also buying gold to protect wealth from a weak yen and a Japanese banking system over-stressed by bad loans.
"The intervention of the yen is I think what gave the move to both gold and silver," said a COMEX floor broker. "I think it's just that the bull markets are taking any news as good news."
The rest of the New York precious metals complex bucked Friday's updraft.
NYMEX July platinum (PLN2) was off $4 to $546 an ounce. Spot platinum (XPT=) was at $542/549, down from $546/553 late Thursday.
September palladium (PAM2) was $2.25 easier at $350.50 an ounce. Spot palladium (XPD=) fetched $342/357 versus $347/355.
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