Gold, silver futures extend record gains

By Virginia Harrison, MarketWatch

SYDNEY(MarketWatch) — Gold futures extended gains in electronic trading Monday, with a cloudy economic picture encouraging investment in the metal, despite a stronger dollar.

Gold for August delivery GC1Q +0.48%   added $6.00, or 0.4%, $1,596.10 an ounce on the Comex division of the New York Mercantile Exchange during Asian trading hours.

Gold finished the week at a fresh record nominal settlement price of $1,590.10 an ounce.

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Uncertainty surrounding the health of the global economy has in part inspired the recent run-up in gold prices, with investors flocking to the metal as a safe store of value.

Worries about rising inflation — enhanced by the possibility of the injection of further stimulus into the U.S. economy — has also been supportive for gold.

The impasse in U.S. debt ceiling talks also added to gold’s appeal, as the Aug. 2 deadline for Congress to pass legislation to prevent a default loomed.Read the latest on debt-ceiling negotiations in Washington.

More clarity on the state of the U.S. economy was due this week with a slew of housing indicators and jobless claims data. Read more on the U.S. economic week ahead.

Silver rises

Silver continued to outpace gold’s gains, with the September contract SI1U +2.20%   adding 70 cents, or 1.8%, to $39.76 an ounce.

The metal was the worst performer of the precious complex during the second quarter, Anne-Laure Tremblay of BNP Paribas wrote in a research note, but it could outperform gold towards the end of the summer.

“If current uncertainties about the debt deal in the U.S. and risks of contagion of the fiscal crisis in the euro zone subside, then the gold price, to which silver is tied, may be range-bound during the summer,” Tremblay said.

“Silver could outperform gold once more towards the end of summer, and we would expect the gold-silver ratio to start declining once more as a result,” she said.

Copper bucked the broader positive trend Monday, with the September contractHG1U +0.13%   losing 0.1%, to $4.41 a pound.

Platinum for October delivery PL1V +0.46%   gained $3.30, or 0.2%, to $1,758.80, while the September contract for palladium PA1U +0.74%   added $1.35, or 0.2%, to $780.00 an ounce.

The dollar index DXY +0.39%  , which tracks the U.S. unit’s performance against a basket of six rival currencies, rose to 75.464, up from 75.148 in North American trade late Friday.

A stronger greenback can discourage investment in dollar-priced commodities. 

Virginia Harrison is a MarketWatch reporter based in Sydney.