SG:Gold Climbs as Europe Turmoil, Dollar Weakness Spur Buying
May 20 (Bloomberg) -- Gold advanced as financial turbulence in Europe deepened and the dollar weakened, spurring demand for precious metals as a store of value.
Immediate-delivery gold rose as much as 0.5 percent to $1,500.10 an ounce, bringing the weekly increase to 0.3 percent. Gold futures for June delivery gained 0.4 percent to $1,498.20 an ounce. Silver futures increased 1 percent to $35.270 an ounce, while cash silver climbed 0.8 percent to $35.285.
Greece's Prime Minister George Papandreou is finalizing the fifth round of deficit cuts to comply with an international bailout. Greek bonds slumped on concern that a potential extension of the nation's bond maturities would deter the European Central Bank from accepting the debt as collateral. The dollar has weakened 0.9 percent this week against a basket of six major currencies, ending two weeks of gains.
"U.S. dollar weakness and uncertainty surrounding Greece's debt situation were supports," Mark Pervan, head of commodity research with ANZ Banking Group Ltd., wrote in a note today.
Twelve of 19 traders, investors and analysts surveyed by Bloomberg, or 63 percent, said bullion will rise next week. Three predicted lower prices and four were neutral.
Gold demand gained 11 percent to 981.3 metric tons in the first quarter from a year earlier, the World Gold Council said yesterday. Jewelry usage in China, the biggest buyer after India, climbed 21 percent to a record in the quarter, and the country's consumption of the metal may double before 2020, the London-based industry group said.
Commodities, Dollar
Accelerating inflation, Europe's debt crisis, a weakening dollar and conflict in Libya boosted the spot price of the metal to an all-time high of $1,577.57 an ounce on May 2. The metal increased 5.4 percent this year after a 30 percent rally in 2010, keeping it on course for an 11th straight annual advance.
The Standard & Poor's GSCI Index of 24 commodities rose 0.3 percent today, rebounding from a 1.1 percent drop yesterday, led by an advance in oil, zinc and nickel. Asian stocks rose after reports showed U.S. jobless claims fell even as manufacturing growth slowed.
"Gold is likely to take its cue from the commodity markets and the U.S. dollar," said Ong Yi Ling, a Singapore-based analyst with Phillip Futures Pte. "A weaker dollar and strong commodity prices could propel gold above the resistance of $1,500 an ounce."
Immediate-delivery palladium increased 0.3 percent to $729.50 an ounce, heading for a 2.9 percent weekly gain, while platinum was little changed today and this week at $1,769 an ounce.
