Gold and silver both continued their upward climb, joined by other commodities, in early European trading on Friday. Prices were fueled by a decrease in the value of the dollar, encouraged by news of growth in euro zone economies.
While commodities had been hit with selling on Thursday, Reuters reported that they regained some lost territory on Friday with precious metals leading the move. Peter Fertig, a consultant at Quantitative Commodity Research, was quoted in the report saying, "Today economic data out of the euro zone has been positive, which supported stock markets and the euro, and the dollar weakened, which is supportive for commodities in general, and in particular the precious metals."
Fertig went on to say, "But the market is still very nervous about the recent volatility and sell-off in commodities. Economic forecasts might be revised to the downside. It is still a bit early to conclude that we are now in recovery."
The bid price for spot gold was $1,509.39 per ounce in late morning European trading, against a late Thursday price in New York of $1,502.35. U.S.gold futures for June delivery gained $2.40 per ounce to $1,509.20. Silver hit $35.61 an ounce against $34.60. On Wednesday and Thursday, there was heavy selling in silver, which pulled gold down along with it. Between last week and this week, silver has fallen more than a third since it hit a record high of $49.51 in late April.
HSBC analyst Jim Steel said in a note, "Silver prices have been volatile with wide price swings occurring almost every day this month. We still look for silver to stabilize but believe that silver price will weaken relative to gold prices, based on rapid increases in silver mine supply. We anticipate the silver/gold ratio will trade back up to 1:50 from its current 44:1."
Shanghai has experienced a strong increase in speculative silver trade, which is thought to be responsible for silver's swift rise and fall. The Shanghai Gold Exchange announced on Friday that if there is no drastic movement in silver prices, it will reduce margin requirements for the metal back to 18% from 19% from May 13 settlements.