April 19, 2016 / 4:50 AM / 4 years ago

PRECIOUS-Silver surges to 10-month high; lifts gold

(Rewrites with silver move, trader comments)
    By A. Ananthalakshmi
    SINGAPORE, April 19 (Reuters) - Silver jumped 3 percent to
its highest in more than 10 months on Tuesday on a softer dollar
and robust buying in China, helping to lift gold by 1 percent.  
    After quiet trading early in Asia, spot silver surged
3 percent to $16.73 an ounce, its highest since June 2015. It
pared some gains to trade up 2.5 percent at $16.628 by 0740 GMT.
    The surge boosted gold to a session high of $1,246.40
an ounce, up more than 1 percent, after it dipped 0.3 percent
earlier in the day in choppy trading. 
    "Gold is following silver higher," said Ronald Leung, chief
dealer, Lee Cheong Gold Dealers, Hong Kong.
    "One reason is that the dollar is weakening. Another reason
is that there is heavy buying in silver in Shanghai. And that
has triggered buying in gold as well," Leung said.
    The most traded silver contract on the Shanghai Gold
Exchange jumped as much as 4.3 percent to 3,595
yuan per kilogram ($17.28 per ounce).
    Another trader said spot silver triggered stops once it
breached the $16.30 level, prompting heavy purchases.
    The dollar fell 0.2 percent against a basket of major
currencies on Tuesday. Commodity currencies rose against the
U.S. dollar, drawing support from oil prices which stabilised
after a slide.
    Oil prices gained on Tuesday as a strike in Kuwait cut huge
amounts of crude out of the supply chain, but analysts said the
disruption would be short-lived and that markets would soon
refocus on a global supply glut. 
    A major index of Asian shares rose to five-month highs on
Tuesday, but that did not damp demand for gold, often seen as a
safe-haven. 
    Gold traders were also watching for comments from Federal
Reserve officials to gauge the outlook for U.S. monetary policy.
    The Fed raised rates modestly from near zero in December,
its first policy tightening in nearly a decade. While futures
markets imply no further hikes until December, Fed projections
imply about two more hikes before year end.
    The Fed is set to hike interest rates more rapidly than
investors currently expect, Boston Fed President Eric Rosengren
said on Monday, pushing back on what he said was investors' too
pessimistic view of the U.S. economy and monetary policy.
 
    New York Fed President William Dudley said U.S. economic
conditions are "mostly favourable", but the Fed remains cautious
in raising interest rates because threats loom. 
    Top gold consumer China launched a yuan-denominated gold
benchmark on Tuesday, as the country took an ambitious step to
exert more control over the pricing of the metal and boost its
influence in the global bullion market.        
    
    PRICES AT 0740 GMT
 Metal              Last     Change   Pct chg
                                             
 Spot gold           1242.8    11.65     0.95
 Spot silver         16.628    0.407     2.51
 Spot platinum        985.3      9.8        1
 Spot palladium         569        4     0.71
 Comex gold          1244.2      9.2     0.74
 Comex silver        16.655    0.402     2.47
                                             
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin and
Tom Hogue)
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