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Gold, silver up; dollar off
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July 28, 1998: 6:40 p.m. ET
Analyst says Clinton's legal woes hurt dollar; precious metals gain in response
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NEW YORK (CNNfn) - Precious metals got a lift Tuesday as the dollar lost its strength against foreign currencies after a judge granted immunity for Monica Lewinsky to testify about her alleged affair with President Clinton.
The gold futures contract for delivery in August, the most active month of Comex trading, rose $1.50 to $291.70 an ounce.
Meanwhile, silver futures contracts for September delivery rose 2 cents to $5.67 an ounce.
The dollar, which analysts said often gets rattled as domestic political uncertainty rises, fell Tuesday after a federal judge gave Lewinsky immunity in an ongoing investigation against President Clinton.
Independent counsel Kenneth Starr has subpoenaed Lewinsky, a former White House intern, to testify before a grand jury in a probe about whether Clinton told Lewinsky to lie about their alleged sexual affair.
"A lot of the market's moves were very much Lewinsky-related," said Bill O'Neill, the senior futures analyst at Merrill Lynch. "And that may have helped gold and silver because of the weakness in the dollar."
Gold prices moved higher with a slump in the dollar Tuesday against both the Japanese yen and the German mark.
A close link between the yen and gold has developed recently because a stronger yen means Asian consumers can buy more gold.
That comes at a time when European central banks have been considering whether to lower their gold reserves further.
The silver market has benefited from speculation Warren Buffett may soon try to sell his holdings and has been talking up prices before a sale, analysts said. Buffett said earlier this year he built up his silver holdings, giving him control of one-fifth of the world's annual supply.
Commodity prices overall have been slumping of late. On Monday the Commodity Research Bureau's index fell to new five-year lows.
The CRB index -- which offers a cross-section of the health of the commodities markets such as metals, oil, energy and grains -- fell to 206.50 points on Monday, its lowest level since June 1993.
The index remained almost unchanged Tuesday, closing at 206.63 points.
"The economic scenario doesn't bode well for commodities," said O'Neill, referring to recent economic worries that have been rocking Asia. "We're still in this Asia mentality."
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