Silver prices hit 31-year high

In addition to investment demand,an expected increase in buying is likely to support silver.

Silver jumped to its highest since early 1980 on Tuesday on inflation concerns,a rise in ETF holdings to another record and growing industrial demand,while gold hardly moved as the euro held below this week8217;s five-month high versus the dollar.

In addition to rising investment demand for silver as a cheaper alternative to gold,an expected increase in physical buying from China was likely to support the metal,which gained 22 per cent in the first quarter 8212; its ninth consecutive quarterly increase.

Silver,widely used in electronics manufacturing,rose as high as 38.73 an ounce and was quoted at 38.64 an ounce by 0301 GMT,up 22 cents.

8220;We do see a lot of demand for silver from China,so we think silver used in solar panels have increased. We think China will have a lot of demand for silver in the medium to long term,8221; said Natalie Robertson,commodities strategist at ANZ in Melbourne.

8220;With China focusing more on renewable energy,especially after the nuclear crisis in Japan,they will probably be developing a lot more solar panels. Fundamentally,the silver picture looks very strong as well.8221;

IShares Silver Trust said its holdings rose to a record at 11,162.45 tonnes by April 4 from 11,139.52 tonnes on March 24.

But some analysts remain wary of silver8217;s extreme volatility,which has led to some heart-stopping reversals in recent years. When commodities sold off heavily in mid-March,silver dropped nearly 5 per cent in a single day,versus gold8217;s 2 per cent fall.

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Gold added 30 cents to 1,436.85 an ounce 8212; below a lifetime high around 1,447 an ounce struck last in March.

Trading was slow,with financial markets closed in Hong Kong and mainland China.

8220;I think China has turned to silver jewellery since last year because it8217;s cheaper. I do see demand for silver from China for jewellery and I also heard China is buying silver for hedging purposes,8221; said a physical dealer in Singapore.

8220;Gold is very quiet,although I do see light physical buying from Thailand.8221;

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US gold futures for June GCM1 rose 4.5 an ounce to 1,437.5 an ounce.

The euro held below this week8217;s five-month high against the dollar and 11-month peak versus the yen as investors paused to assess how much it can make in fresh gains given that expectations for interest rate rises have largely been priced in.

The Nikkei slipped on Tuesday with the mood soured by Tokyo Electric Power8217;s fall to an all-time low,but was set to stick to a tight range for a third day as a post-quake rebound looks to have run its course.

US crude oil futures slipped early Tuesday,but still hovered around the Monday8217;s 2-1/2 year high as geopolitical risks amid fighting in Libya,unrest in Yemen and stalled elections in Nigeria continued to support prices.