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Gold, silver climb as energy prices rise, U.S. dollar recedes

Gold, silver climb as energy prices rise, U.S. dollar recedes

Gold prices advanced Wednesday, bolstered by rising oil prices and a weakening U.S. dollar, both of which are potential signals of inflation.
Elsewhere, commodity prices finished mostly higher. Wheat prices logged a huge gain and record high in the agriculture futures market, while industrial metals recovered from early declines.
The financial and commodity markets have been uneasy for more than a month as credit conditions have tightened and sharpened concerns about economic growth prospects. But Wall Street's recovery on Wednesday _ driven by bargain-hunting after the previous session's losses _ supported gains in the commodities markets, as well.
Gold prices rose in response to climbing energy prices and a declining dollar, which lost ground to the euro and British pound. Investors have become increasingly confident of a cut in the Federal Reserve's benchmark interest rate, which could further undermine the U.S. dollar and, as a result, support precious metals and other commodities.
Investors often turn to gold as a hedge against inflationary signs, including high oil prices or a sliding dollar.
Jim Steel, HSBC precious metals analyst, said the comeback on Wall Street and in emerging markets was positive for gold and alternative assets in general. Stocks rose broadly Wednesday, with major equity indexes in the U.S. and Europe notching gains.
December gold rose $1.90 an ounce to settle at $675.40 on the Nymex, while December silver gained 8.3 cents to end at $12.007 an ounce.
Meanwhile, energy prices jumped after the government reported larger-than-expected declines in U.S. inventories of crude oil and gasoline.
The Energy Information Administration said supplies of crude in storage fell by a hefty 3.5 million barrels, while gasoline inventories dropped by 3.6 million barrels in the week ended Aug. 24. Analysts polled by Dow Jones Newswires expected much smaller drawdowns of 800,000 barrels of crude and 1.8 million barrels of gasoline.
At the same time, the nation's utilized refining capacity fell for the third straight week to 90.3 percent, indicating that gasoline supplies may continue to shrink.
Light, sweet crude for October delivery added $1.78 to settle at $73.51 a barrel on the New York Mercantile Exchange. Gasoline for September delivery picked up 8.54 cents to close at $2.1008 a gallon.
Also bullish for the market was the strong level of gasoline supplied to market, which totaled 9.6 million barrels per day. The prior week's nearly 9.8 million barrels supplied to market was an all-time high, according to Wachovia Corp. economist Jason Schenker.
BNP Paribas analysts noted in a report that "the summer gasoline season may be over for the crude market, but the draw is a timely reminder that the product market remains very tight."
Overseas, industrial metals ended mixed on the London Metal Exchange. Nickel, tin, aluminum and copper rose. Copper found late support in news that unionized workers at Southern Copper Corp. copper mines in Peru voted to start a strike Sept. 12 that was put on hold in mid-August after a massive earthquake rocked the country, Dow Jones Newswires reported. Workers rejected the company's six-year contract offer and proposed wage increase.
December copper picked up 3.15 cents to settle at $3.344 a pound on the Nymex.
In Chicago, wheat prices _ lifted by strong global demand and pinched supplies of quality grain _ trekked to a new record amid reports of fresh export demand. Wheat prices have been climbing since late May and are up about 51 percent since the year began.
"Any time you have someone coming to the market looking for wheat, you're going to have these upswings because supply is so tight right now," said Christian Mayer, market adviser with Northstar Commodity.
The December wheat contract on Wednesday briefly reached a record of $7.60 a bushel on the Chicago Board of Trade. Mayer noted that once prices crossed the previous high of $7.54, technical buying was likely to surge and send the December contract up sharply. Computer-driven fund buying often kicks in at key price peaks, just as certain price lows will spark additional technical selling.
December wheat piled on 20.25 cents to settle at $7.585 a bushel. December corn shed 4.5 cents to $3.4025 a bushel, while soybeans rose 2 cents to $8.7425 a bushel.


Updated : 2021-05-18 11:08 GMT+08:00