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Gold, Silver Gain as Commodity Rally Spurs Inflation Concern

Gold futures rose the most this month as grain and energy prices surged, boosting the appeal of the precious metal as a hedge against inflation. Silver jumped almost 4 percent.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials gained as much as 2.6 percent. Global food costs are close to the highest ever, according to the United Nations, and crude oil topped $100 a barrel today. Analysts surveyed by Germany’s Ifo research institute raised their 2010 global inflation forecast to 3.8 percent from 3.4 percent.

“The risk appetite is coming back to commodities across the board,” said Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago. “There are still a lot of strong economies that want to buy commodities. Anytime you see a pullback, people will come in and buy gold to hedge against inflation and diversify away from the dollar.”

Gold futures for June delivery rose $15.80, or 1.1 percent, to settle at $1,495.80 an ounce at 1:43 p.m. on the Comex in New York, the biggest gain since April 29.

Accelerating inflation, Europe’s debt crisis, a slumping dollar and fighting in Libya boosted gold to a record $1,577.40 on May 2.

Gold held in exchange-traded products fell 1.49 metric tons to 2,037.8 tons yesterday, the lowest since April 7, data compiled by Bloomberg show. Futures have dropped 3.9 percent this month.

“Perceptions that gold may have put in a medium-term top in the upper $1,570s before the month got under way probably contributed to the exodus from the ETP niche,” said Jon Nadler, an analyst at Kitco Inc. in Montreal.

Silver futures for July delivery climbed $1.606, or 4.8 percent, to $35.097 an ounce, the biggest gain since May 9.

Palladium futures for June delivery rose $22.95, or 3.2 percent, to $737.20 an ounce on the New York Mercantile Exchange, the largest increase since April 20.

Platinum futures for July delivery rose $18.90, or 1.1 percent, to $1,779.90 an ounce, the biggest gain this month.

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