NEW YORK: Even a rising dollar couldn't stop gold and silver prices from climbing Tuesday as investors bid up the precious metals in light of economic woes in Europe and military conflict in the Koreas.
The U.S. dollar rose more than 1 percent, which would normally drive down gold prices as investors pulled out of a metal that is used as a hedge against inflation. But gold rose along with the dollar, a rarity in commodity markets, as instability overseas made it an attractive refuge in times of trouble.
"Any time you have conflict and war, gold is always a safe haven play you can go to," said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC. "On a day when it should be lower, it really was strongly higher,
which is just a great sign for gold going forward."
Gold for December delivery rose $19.80 to close at $1,377.60 an ounce, while December silver contracts rose 11.1 cents to close at $27.572 an ounce.
The spike was largely driven by escalating tensions between North and South Korea, Patton said. The countries exchanged artillery fire Tuesday after the North shelled an island near their disputed sea border, killing at least two South Korean marines, setting dozens of buildings ablaze and sending civilians fleeing for shelter.
The clash, which put South Korea's military on high alert, was one of the rivals' most dramatic confrontations since the Korean War ended.
At the same time, investors are worried about debt-saddled nations in Europe that might need further bank bailouts or fiscal stimulus. Such efforts could boost inflation and make gold even more attractive, Patton said. He predicted gold could rise above $1,400 an ounce before the year is over.
Industrial metals also rose.
Palladium for November delivery gained $6.65 to settle at $690.60 an ounce. November platinum rose $2.20 to close at $1,657.70 an ounce and March copper lost 5.1 cents to close at $3.7110 a pound.
In agricultural commodities, March wheat lost 37.5 cents to settle at $6.8075 a bushel. March corn gained 13.75 cents to $5.43 a bushel and January soybeans gained 17.5 cents to $12.39 cents a bushel.
Oil and other energy prices dropped for a third day on persistent worries about the global economy after China took additional steps to control inflation, and North Korea and South Korea clashed.
China's now banning hoarding of oil, coal and other key commodities to ensure supplies and contain price increases.
Benchmark oil for January delivery slipped 49 cents to settle at $81.25 a barrel on the New York Mercantile Exchange.
In other December Nymex contracts, heating oil slipped 1.9 cents to settle at $2.2496 a gallon, gasoline gave up 1.77 cents to $2.1342 a gallon and natural gas fell 0.7 cents to $4.264 per 1,000 cubic feet. - AP
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