Gold, Silver Prices Hold Gains as Oil Stabilizes

Gold and silver prices were easing off recent highs Monday as profit taking battled with safe haven buying.

Gold for April delivery was adding $4 to $1,432.60 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,445.70 and as low as $1,428.30. The spot gold price was flat, according to Kitco's gold index.

Silver prices were following gold, rising to $0.71 to $36.04 after hitting a 31-year high of $36.74.

As oil prices go, so do gold and silver. The precious metals followed black gold higher in overnight trading. Gold hit a high, silver broke to a 31-year high and oil prices surged to a two-and-a-half year high. Investors were buying gold and silver as protection against uncertainty in the Middle East, an ongoing civil war in Libya, rising inflation led by high oil prices and loose monetary policies. Mid-way through the trading day all three commodities backed off their recent levels as investors took profits.

James Moore, research analyst for FastMarkets, wrote Monday that new highs in silver could trigger profit taking "but with the situation in the [Middle East/North Africa] region still extremely volatile and oil continuing to rise, both gold & silver are likely to extend on a mix of safe-haven and anti-inflationary hedging with silver set to challenge $38–$40 an ounce but ultimately the all-time record of $50 an ounce."

David Morgan, founder of Silver-Investor.com, is long on silver using silver stocks. "The equities are lagging the metals and if this rally is going to continue the equities will play catch up pretty quickly," he said. Morgan would use the same strategy with gold stocks versus the underlying commodity.