Silver Hits Six-Week High
Silver futures surged to their highest level in six weeks, as hopes for steady demand for the precious metal replaced the economic gloom that dragged prices lower last month.
The most actively traded silver contract, for March delivery, rose $1.116, or 3.8%, to settle at $31.675 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest ending price since Dec. 9.
About half of silver demand comes from industrial uses, making the metal more sensitive to some economic indicators than gold. Because of its conductivity and durability, silver is used extensively in electronics for cellphones, computers, automobiles and solar panels.
The recent trend of better-than-expected economic data from the U.S. and top commodities consumer China has helped to blunt the pessimism that weighed on the silver market at the end of 2011.
“There is cautious optimism over industrial demand,” said Jim Steel, precious metals analyst with HSBC. “And we have very strong coin demand, which tends to be a stronger influence on silver than the other precious metals markets.”
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Sales of silver coins by the U.S. mint in January are already 50% above the average monthly sales figures in 2011, a reflection of investor demand for precious metals as an alternative asset, analysts said. Demand was also likely fueled as investors saw a bargain in the metal’s steep declines in late-2011.
Gold also rose on Friday, on cautious buying ahead of an expected deal between Greece and its private creditors. Negotiators are trying to ease the country’s debt load and stave off a default.
Gold for February delivery rose $9.50, or 0.6%, to settle at $1,664 a troy ounce, a five-week high.
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