NEW YORK: Gold and silver prices continued to rally Wednesday as uncertainly over energy prices made precious metals an attractive place to park money. Gold and silver had sagged earlier this year as investors started feeling more confident about moving money into stocks. But rising oil prices and political uncertainty in the Middle East have brought precious metals back into favor. “People get more nervous about the economy – if people don't want to buy oil they'll pile into gold,” said Edward Meir, senior commodities analyst at MF Global in New York. The jump in oil prices won't affect all commodities equally, Meir said. While it can boost gold, it can undermine the value of industrial metals like copper and palladium that are tied to manufacturing. Grains and other foodstuffs could also fall if economic growth slows. Gold for April delivery rose $6.50 to settle at $1,437.70. Silver for May delivery rose 40.8 cents to settle at $34.835 an ounce. In other metals contracts, copper fell 1.05 cents to settle at $4.48 a pound. Palladium gained $5.95 at $822.65 an ounce. Platinum rose $14.20 to $1,859.30 an ounce. While the precious metal's rally lost momentum as some investors cashed in the previous session's gains, fresh unrest in the region is likely to reignite its run higher, analysts said. "Ever since things started to happen in the Middle East, you have seen this recovery from the mid-$1,300s back to record highs... driven by safe-haven flows," said RBS Global Banking & Markets analyst Daniel Major. " He said the resilience of gold's move higher would depend on it breaking substantially above its previous trading range. "What will decide that will be how things pan out in the Middle East," he said. "Should we see a calming of the political situation there, there is a risk to the downside, but should we see things escalate and we break above the level we are at at the moment, there is the potential for more to come." Gold prices rallied to a record $1,435.65 an ounce late Tuesday, while silver prices reached their strongest in 31 years, a high they surpassed early Wednesday. Gold rose 6 percent in February, its biggest one-month climb since August, largely on the back of unrest. Ongoing violence in the region cooled appetite for assets seen as higher risk, like stocks, and boosted so-called safe havens like US Treasuries, German government bonds and the Swiss franc. Rising oil prices are set to support gold, analysts said, if they look likely to curb global growth. "They could very well impact (growth in) Europe, the United States as well, and indeed China," said VM Group analyst Carl Firman. "That will give rise to uncertainty, it will lower demand predictions for, for instance, copper, and where it knocks industrial metals and equities, gold will probably benefit."
