Gold, Silver Bounce Back a Correction?

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Gold prices surged to a one-month high this week as a rush of safe-haven buying sparked by Japan’s credit-rating downgrade forced bearish investors to clamor for the exit.

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Gold for February delivery, the most actively traded contract, rose $42.60, or 3.6%, to settle at $1,218.10 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the highest settlement since Oct. 29, when futures closed at $1,224.90 an ounce.

Gold’s gains accelerated as prices broke above $1,190 an ounce, triggering automatic buying orders, brokers said. Bearish traders who wagered on further losses in gold often put automatic buying orders to limit potential losses if the market moves higher.

Moody’s Investors Service cut Japan’s government debt rating by one notch on Monday, sparking a rally in gold during electronic trading overnight. The credit-rating firm flagged delays to planned tax increases as fueling uncertainty about Japan’s ability to reduce its fiscal deficit.

Japanese silver saw a 1.3% increase on Thursday, December 4, reaching JPY 627.00 ($5.23) per 10 grams and making it the biggest upwards shift of the day. US silver closed 1.0% lower at $16.30 per ounce. At CNY 3,490 ($567.57) per kilogram, Chinese silver fell 0.3% yesterday. After a couple of days of improving prices, the price of Indian silver held steady at INR 37,691 ($608.95).

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At JPY 4,649 ($38.79), the price of Japanese gold bullion finished the market day up 1.1% per gram. US gold bullion prices inched up 0.9% to $1,210 per ounce. Chinese gold bullion finished the day up 0.6% to CNY 239.08 ($38.88) per gram. Indian gold bullion gained 0.4% to finish at INR 27,019 ($436.53) per 10 grams.

After a 1.2% increase, Japanese platinum bar finished the day at JPY 4,715 ($39.34) per gram. The price of Chinese platinum bar increased 0.8% to CNY 257.00 ($41.80) per gram. US platinum bar saw its price rise 0.7% to $1,221 per ounce.

US palladium bar finished the day down 0.9% to $794.00 per ounce. The price of Chinese palladium bar declined 0.6% to CNY 176.00 ($28.62) per gram. Japanese palladium bar saw little change in its price yesterday at JPY 3,130 ($26.11) per gram.

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