Europe Fans Flames of Metals Rally

Published on Friday, 29 June 2012 18:30 Written by Todd Shriber

Precious metals rallied on Friday after European policymakers said they loosen loan requirements for Spain and that help could be provided to Italy if needed. News that the European Union is acting to preserve the Italian and Spanish economies, the Eurozone’s third- and fourth-largest, respectively, crushed the U.S. dollar and lit a fire under the precious metals complex. COMEX gold for August delivery surged $53.80, or 3.5%, to settle at $1,604.20 a troy ounce.

Friday’s gain was enough to propel gold to a positive finish for the month of June. That is first higher monthly finish in five months for the yellow metal. The progress from the two-day EU summit in Brussels eased fears that Europe's debt problems would be mired in bureaucratic stalemate between debt-laden countries and their wealthier, but more austere neighbors, the Wall Street Journal reported.

As we’ve noted in this space several times in recent weeks, gold’s lack of safe haven status has threatened the integrity of its decade-long bull run, but on days when traders get the benefit of some good news out of Europe, gold soars.

That was certainly the case Friday as the iShares Gold Trust (NYSE: IAU) climbed 2.6% while the SPDR Gold Shares (NYSE: GLD) added 2.7%. Silver futures were home to a snap-back rally of sorts, surging 5.1%, or $1.333, to settle at $27.580 a troy ounce. That helped the iShares Silver Trust (NYSE: SLV) gain almost 4% on volume that was slightly above the daily average.

As is the case with oil, which posted one of its best one-day runs on record, gold and silver look a tad over-extended following Friday’s good cheer and it would be reasonable to expect some profit-taking come Monday.

Despite more glum economic data out of the U.S., the other white metals rallied as well. On volume that was slightly above average, the ETFS Physical Platinum Shares (NYSE: PPLT) jumped 4.3% and now must take out resistance at $144. On weak trade, the ETFS Physical Palladium Shares (NYSE: PALL) climbed. PALL faces new resistance at $58, an area that used to be old support.

On a banner day for U.S. equities, mining stocks and ETFs got in on the party as the Global X Silver Miners ETF (NYSE: SIL) posted a gain of more than 3%. The Market Vectors Gold Miners ETF (NYSE: GDX) added 3.4% while the truly impressed with a gain of 5.6% volume was light across all three funds.