[miningmx.com] — Gold rose to a seven-week high on Monday as spreading unrest in the Middle East burnished the metal’s appeal as a safe-haven asset, while prices of silver hit historic highs on expectations of growing industrial demand.
Gold added to a weekly gain of nearly 3% last week and was poised for further upside on fresh news from North Africa and the Middle East, where revolutions which deposed the presidents of Tunisia and Egypt have inspired protests across
the region, threatening the grip of long-entrenched autocratic leaders.
Spot gold climbed to a seven-week high of $1,396.1, before easing slightly to $1,395.9 per ounce during early morning trade.
Gold is poised for a sixth straight session of gains. US markets are closed on Monday for a holiday.
US gold futures for April delivery climbed 0.7% to $1,395.90 per ounce, compared to Friday’s settlement at $1,388.60.
“With the unrest in the Middle East and North Africa, dealers couldn’t leave for a long weekend with short positions, and this reflects investor sentiment for a flight to safety,” said Yuichi Ikemizu, Tokyo branch manager for Standard Bank,
adding that gold prices were likely to keep inching higher.
Spot gold may rise to its Jan. 3 high of $1,423.57 per ounce as it has ignored bearish signals and continued to shoot up, says Wang Tao, a Reuters market analyst for commodities and energy technicals.
The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said holdings fell to 1,223.098 tonnes by Feb. 20, its lowest in nine months, from 1,224.008 tonnes on Feb. 15.
Traders said there was slightly higher demand for gold bars in the Middle East, mainly due to the unrest.
SILVER HITS 31-YEAR HIGH
Expectations of growing industrial demand on an improving world economy and a rally in the overall precious metals market also helped hoist silver to its highest level since 1980.
Spot silver rose to its 31-year high at $33.18 an ounce.
The silver market has become overbought, as the Relative Strength Indicator rose to a three-month high near 77. An RSI reading above 70 indicates an overbought market.
“Cash silver is expensive now compared to the forward market,” said a Hong Kong-based trader, “There might be a squeeze going on.”
