Precious metal futures prices rose for the third straight day Friday, partially offsetting recent steep losses as a sharp drop in oil prices stirred speculation that interest rates may fall.
On other commodity markets, copper futures rose sharply, livestock and meat futures were mixed; and grains and soybean were mixed.Gold futures settled $2.70 to $2.80 higher on New York's Commodity Exchange with the spot price, represented by the contract for October delivery, at $372.80 a troy ounce; silver was 5.8 cents to 6.1 cents higher with October at $4.258 a troy ounce.
Platinum outpaced the other precious metals. Platinum futures ended $10.50 to $11.50 higher on the New York Mercantile Exchange with October at $407.70 a troy ounce.
The metals virtually ignored a number of traditionally bearish signals including sharply higher stock prices, a stronger dollar and a drop in oil prices.
Instead, metal traders focused on the deflationary implications of lower oil prices, which fell on perceptions that the Iraq-U.S. standoff in the Middle East is moving toward a peaceful settlement.
The letup in inflationary worries prompted speculation that the Federal Reserve Board may take action to lower bank lending rates.
"The last time the Fed indicated it was easing credit policy back in July, that's when gold accelerated to the upside," said Bernard Savaiko, senior metals analyst for PaineWebber Inc.
John Jonat, who trades precious metals for Deak International Inc., also said gold's rise was a spillover from the platinum market, which was boosted by strong Japanese demand.
Both Jonat and Peter Cardillo, commodity trading adviser for Jesup, Josephthal & Co., said gold could climb as high as $390 an ounce before hitting pressure to fall.
In petroleum trading on the New York Mercantile Exchange, light sweet crude oil ended $2 to $3.01 lower with November at $33.79 a barrel.