PRECIOUS METALS: Gold, Silver Rise As Inflation Pressures Mount

NEW YORK (Dow Jones) - Concerns about inflation pushed gold futures to their highest price in almost two months while silver continued approaching a maximum of 31 years.
Gold for March delivery was recently up $ 12.30, or 0.9%, to $ 1421.60 per troy ounce on the Comex division of the New York Mercantile Exchange. Its intraday high of $ 1422.30 was the stronger gold price since 03 January, while March silver peak of $ 34,425 was the highest silver price since March 6, 1980.
"The history of inflation for gold is everywhere," said George Gero, vice president of RBC Capital Markets Global Futures. Gold and silver are considered for their value in times of consumers and the increase in producer prices.
Preliminary data Tuesday showed that the rate of the euro zone, inflation rose to a maximum of 28 months from 2.4% in February. Meanwhile, two polls showed that Chinese manufacturers price pressures intensified. Official data showed that input prices rose in February. Another indicator, issued by HSBC, said that the rates of input prices and producer prices increased so much, and there was evidence that manufacturers are going to customers the increased costs of raw materials.
The growing concern with inflation was helping gold and silver transition his role as safe haven investments known as Middle East tensions eased.
"The gold market needs a steady diet of bad news continuing to rise," said Jim Steel, senior vice president and metals analyst at HSBC Holdings in New York.
Metals, considered a hedge against political instability and economic crisis, have increased this month as the unrest has spread in the Middle East and North Africa.
Meanwhile, data released by the U.S. Treasury on Monday showed that China bought more than U.S. government debt last year it was revealed for the first time was also boost the metal. Demand is maintained above Treasuries, pushing yeilds and making gold more attractive non-interest bearing, Steel said.
The annual survey of foreign holdings of U.S. securities showed that Treasury holdings of China reached 1.108 trillion U.S. dollars at the end of June 2010, 260 billion U.S. dollars more than the level suggested by the monthly data less sophisticated.

(Source: http://online.wsj.com/article/BT-CO-20110301-709527.html)