NEW YORK/LONDON (Reuters) - Gold rose more than 1 percent on Thursday, breaking its longest stretch of consecutive declines in almost six months, as anticipation of an emergency loan for Ireland boosted the euro and lured investors back into commodities.
Silver and palladium each rose about 5 percent, and commodities bounced broadly as the euro rallied against the dollar amid optimism Ireland will get loans to ease its banking and debt crisis.
“Precious metals are rebounding today along with other commodities, mainly as the dollar weakens relative to a number of currencies,” said Anne-Laure Tremblay, BNP Paribas precious metals strategist.
Gold, platinum, copper and crude oil had all declined sharply this week as talk of a possible Chinese interest rate hike prompted caution about the outlook for raw materials demand, and as concerns over debt levels in the euro zone pressured the single currency against the dollar.
Gold’s inverse relation to the U.S. dollar has strengthened in the last week, indicating the metal has gained traction as the euro has bounced off recent seven-week lows.
Spot gold rose 1.3 percent to $1,352.50 an ounce at 1:48 p.m. EDT (1848 GMT), but down from an intraday high of $1,359.15 after strong regional U.S. manufacturing data helped the dollar pare losses.
U.S. gold futures for December delivery settled up 1.2 percent at $1,353.
Silver rose 4.7 percent to $26.82 an ounce, though it remains well below the 30-year high of $29.33 an ounce it hit earlier in November.
COMEX volume was lighter than the last several days when the markets sold off. Gold futures volume was about 3 percent lower than their 30-day average, while silver turnover was 5 percent below its average.
Ireland’s central bank chief said on Thursday he expected the country to receive tens of billions of euros in loans from European partners and the IMF to help shore up its shattered banks and stabilize the economy.
“It’s not just a currency thing. It’s got to do with the belief that governments aren’t in control of the economic and financial situation. That’s been supportive for gold investment,” said Matthew Turner, an analyst with Mitsubishi.
Gold has risen by over 20 percent this year to a record $1,424.10 an ounce, lifted by concern over sovereign debt and the stability of the currency markets, before being hit heavily this week by weakness in other commodities.
CURRENCIES STILL VOLATILE
“At one point, everyone was selling commodities,” said Simon Weeks, head of precious metals at the Bank of Nova Scotia. “People had been good buyers, everyone had put risk back on the books, and suddenly they got panicky about China and started liquidating, and gold got caught up in that.
“But I do think it will reassert itself on the crosses at some point as a currency, because clearly people don’t like the currency markets. Generally speaking, whichever currency you are looking at, people aren’t really that comfortable,” he said.
Platinum climbed 1.7 percent to $1,661.49 an ounce, while palladium rose 5 percent to $692.97.
Palladium holdings of ETFS Physical Palladium Shares, the physically-backed exchange-traded product operated by a unit of London’s ETF Securities, held at a record high of 920,362 ounces on Wednesday, the company’s website showed. Holdings of ETFS Physical Platinum Shares were at 343,132 ounces, their highest since early May.
Industrial buying of palladium is expected to outstrip call for platinum. “Palladium is seen stronger than platinum in terms of auto demand,” Fairfax analysts said in a note.
Additional reporting by Amanda Cooper in London; Editing by David Gregorio
Our Standards: The Thomson Reuters Trust Principles.