Silver Rallys on Middle East Worries, Equity Declines
NEW YORK (Aug 15) Silver futures rallied into bull-market territory on Thursday, while gold prices touched a fresh eight-week high, as worries about the Middle East and losses in equity markets stoked appetite for haven assets.
Silver for September delivery was recently up $1.188, or 5.5%, at $22.975 a troy ounce. The contract entered bull-market territory, rising up roughly 20% off its June settlement lows.
Gold for December delivery was up $32.20, or 2.4%, at $1,365.60 a troy ounce.
Both gold and silver caught a boost from renewed concerns about the political instability in the Middle East after President Barack Obama condemned the violence in Egypt and cancelled plans to hold joint military exercises with the country next month.
Investors often seek out currency alternatives like precious metals during times of political uncertainty in order to protect their wealth against the potential impact of government upheaval on fiat-currency market.
Gold's rally was supercharged by losses in the equities markets, with the Dow Jones Industrial Average recently trading down 218 points, or 1.4%, at 15119.
"We're looking at stocks getting hit and gold is looking more attractive," said Bill Baruch, a senior market strategist with iiTrader.
Gold and equities tend to move in opposite directions as the precious metal is seen as a haven while stocks are considered a riskier asset that profits from economic growth.
Gold's rally caught a second wind after prices breached above the $1,340 level, where many bearish investors had positioned "stop loss" orders, Mr. Baruch said. These automatic trades are triggered if market prices rise above a certain level, and are authorized to purchase gold in order to close out bets on lower prices.