By: Clara Denina London 13/05/2011 - Gold rose in European trading on Friday, helped by a weaker dollar after better-than-expected European data but market players expect volatility to increase on uncertain microeconomic conditions. Spot gold rose $7.10 to $1,513.25/1,514.10 per ounce after falling 1.6 percent in the previous session on dollar strength and profit-taking. On the charts, a close above the 21-day moving average yesterday helped the metal to break back above the seven-day moving average of $1,500, which has now become the next support level. The next resistance point stands at $1,526. “Under extremely volatile market conditions, after initial losses gold regained the psychologically important level of $1,500,” broker Commerzbank said. “Volatile conditions are possible in both gold and silver in coming days,” a trader noted. The euro recovered from yesterday’s six-week low against the dollar to trade around 1.432, although Greece’s debt issues remain a concern, making the single currency vulnerable to more downside pressure - ratings agency Moody’s has just downgraded Greek structured finance transactions. But the European Central Bank is widely expected to raise interest rates after June, which is seen as a positive development for the euro. Today, the euro was sustained by better-than-expected European first-quarter GDP figures. Preliminary data showed German GDP growth at 1.5 percent, above an expected 0.9 percent. French GDP figures also came in above expectations, showing a one-percent rise in the first quarter after a 0.3-percent increase in the fourth quarter of 2010. Chinese CB leading indicator numbers for March released earlier showed growth at one percent, far exceeding the previous figure of 0.3 percent. This followed the People's Bank of China’s announcement that it will raise its banking reserve ratio 0.5 percentage points to a record 21 percent from next week, after the release of core inflation data earlier this week showed growth of 5.3 percent, down from 5.4 percent in March. The main event in end-of-week trading is the release of the latest CPI reading from the US, which will be closely watched for clues to the timing of any potential withdrawal of stimulus measures and future interest rate movements. For April, CPI is expected to have grown 0.4 percent compared with 0.5 percent in the previous month. Data on Thursday - comprising unemployment, PPI, retail sales and business inventories - was mixed, giving no firm indication of the state of the economic rebound there. SILVER STRENGHTENS, CHOPPY TRADING TO CONTINUE Among other precious metals, silver also rose strongly on Friday, with prices up 55 cents to $35.43/35.51 per ounce, but trading remained choppy. It had fallen to a two-and-a-half month low of $32.33 per ounce in the previous session, following gold lower. “Prices continue to be volatile but are up this morning as sustained inflationary concerns prompt investors to seek alternative value stores,” John Meyer at Fairfax said. In other news, the Shanghai Gold Exchange raised the margin requirements for silver futures trading yesterday for the second time in a week, making the metal more expensive to buy. Silver lost more than 30 percent in value over the past two weeks after the CME raised margin requirements for silver futures four times in 10 days to head off a possible price bubble. Elsewhere, platinum, which fell to a six-week low of $1,750 in the previous session, rebounded along with the rest of the complex. It last traded at $1,776/1,781 per ounce, up $10. Palladium comfortably regained the $700 mark - it fell to a worst since March 17 at $697.50 yesterday - to $719/724 per ounce, up $3.

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