PRECIOUS-Gold, silver recover some losses as dollar retreats
Mon May 9, 2011 5:56am EDT
* Gold, silver recoup some of last week's heavy losses * Dollar retreat helps commodities, with oil jumping 3 pct * Caution still dogs markets; euro zone outlook eyed
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, May 9 (Reuters) - Gold climbed back above $1,500 an ounce on Monday as a retreat in the dollar and a rebound in oil prices helped the precious metal recover from its biggest weekly loss since early 2009, while beleaguered silver also rose.
Spot gold XAU= rose as high as $1,510.40 an ounce and was bid at $1,505.20 an ounce at 0947 GMT, against $1,494.05 late in New York on Friday.
Spot silver XAG= was bid at $36.86 an ounce against $35.60, up 3.5 percent.
Among precious metals, silver bore the brunt of last week's commodities sell-off, down 25 percent week on week by late Friday as investors liquidated positions. A near 1 percent retreat in the dollar on Monday is helping it to recover.
"The dollar has stabilised, and it is not unusual that some bottom fishing will be taking place," said Ole Hansen, a senior manager at Saxo Bank. "Gold did not break any significant levels on the downside, so long-term investors were not forced out like in silver, where it was pure carnage."
The euro EUR= bounced back on Monday as some investors viewed its sell-off last week on concerns about Greek debt as overdone, given the fact interest rate differentials between the euro zone and the United States remain favourable. [FRX/]
However, technical indicators suggest the single currency's recovery could be temporary, while uncertainty over how the euro zone will tackle the prolonged debt crisis in some peripheral member countries is continuing to worry buyers.
Any fresh gains in the dollar could put pressure back on commodities, analysts said.
"It could be just a dead cat bounce that we are seeing today in the euro and for gold," said Peter Fertig, a consultant at Quantitative Commodity Research.
"As investors are currently jittery, each (new) rumour could trigger a new wave of selling of the euro and commodities." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Commodities-dollar correlation graphic:
r.reuters.com/wex39r Commodities performance overview: r.reuters.com/nab49r Is the global economy slowing?: r.reuters.com/kej49r Oil daily price changes: link.reuters.com/qaj49r Oil futures positioning: r.reuters.com/jej49r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
OIL RALLIES
A rebound in oil prices still offered solid support to gold, underpinning investor confidence in commodities as an asset class.
U.S. crude futures rose $3 a barrel, helped by a weaker dollar and bargain-hunting after last week's sell-off. [O/R]
On the wider markets, European shares fell, however, after top euro zone finance officials discussed the need for new adjustments to Greece's aid programme, with fund managers advising caution on the euro zone peripheries. [.EU]
A sustained recovery in commodities will be reliant on the outlook for global growth, analysts said. Among precious metals, this is especially the case for those with an industrial element, including platinum and palladium, and silver, last week's biggest loser.
"While cautious investor positioning is one obstacle faced by silver, a bigger roadblock is more likely to be the questions that hang over commodities more generally," said Swiss bank UBS in a note on Monday.
"To be sure, silver's sudden fall was a large reason for the general commodities washout, but fading economic momentum was another. For silver to climb convincingly back over $40, it needs the support of generally rising commodities and a stable risk appetite."
Among other precious metals, platinum XPT= was at $1,791.49 an ounce against $1,781.75, while palladium XPD= was at $727.22 against $713.88.
(Reporting by Jan Harvey; editing by Jason Neely)
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