By Lewa Pardomuan
SINGAPORE, May 27 (Reuters) - Gold rose on Friday as
mounting worries about a Greece debt default prompted buying
from investors, while silver gained more than 2 percent after
tumbling from a two-week top in the previous session.
Gold may revisit a recent three-week top before profit
taking kicks in, while silver -- which has outpaced gold and is
heading for its best weekly gain since late April at more than 7
percent -- will continue seeing volatile price movements,
analysts said.
Spot gold added $5.60 to $1,523.70 an ounce by 0517
GMT as Greece fights to avoid a debt restructuring. Gold touched
a record around $1,575 in early May.
"It's still the expectation that there's a possibility for a
Greece default and greater safe-haven buying coming to the
precious metals such as gold and silver," said Ong Yi Ling,
investment analyst at Phillip Futures in Singapore.
"With gold prices actually close to a three-week high, then
perhaps you could also see some profit taking and some closing
of the bullish position later in the day," she said.
Silver rose 27 cents to $37.51 an ounce in thin
trade after hitting a high around $38. It had rallied to a
two-week high at $38.84 on Thursday before hitting a low around
$36 as speculators booked profits. Silver struck record at
$49.51 an ounce in April.
"I guess for silver, it's a lot of speculation and a lot of
volatile movements. I would expect that to continue. We're not
seeing the longer-term investors really coming back into the
market yet," said Ong of Phillip Futures.
"It's pretty much speculation and volatility going forward."
Holdings on the largest silver-backed ETF, New York's
iShares Silver Trust , dropped 0.51 percent earlier this
week and remained unchanged at 9,941.33 tonnes on Thursday.
Holdings have fallen by nearly 9 million ounces this week
alone, bringing year-to-date outflow to 8.4 percent, or 42.79
million ounces.
The gold-silver ratio, used to measure how many ounces of
silver can buy one ounce of gold, was at about 40 after falling
to around 31 in late April, its weakest since early 1980s.
Precious metal prices continued to be supported by jitters
over Greece's debt problems that could have a big ripple effect
across other high risk-European countries struggling with gaping
fiscal deficits. [ID:nLDE74O1MZ]
The International Monetary Fund could withhold the next
slice of aid to Greece due next month, the head of euro zone
finance ministers said on Thursday, spooking markets with the
possibility of a default. [ID:nLDE74P1HC]
Overall trading was slow in the bullion market ahead of the
U.S. Memorial Day holiday weekend. COMEX June gold futures
rose $3.3 an ounce to $1,526.1 an ounce.
The dollar tumbled broadly on Friday after weak U.S.
economic data dragged the 10-year Treasury yield down to a
six-month low overnight, with the greenback's drop gaining steam
on a flurry of stop-loss selling.
"I think people are cautious about silver after seeing what
happened yesterday. There's only a slight amount of physical
buying. It's a holiday in the U.S. next week, so people may
square off positions tonight," said a dealer in Hong Kong.
"But I think sentiment is still bullish for gold because of
the problems in Greece."
PLATINUM, PALLADIUM TRACK GOLD HIGHER
Gains in gold lifted platinum around 1 percent to a
high of $1,784 an ounce, but activity in the physical market has
yet to pick up in Japan after the devastating earthquake,
tsunami and nuclear disaster in March.
Platinum bars were offered at a discount of $1.5 to the spot
London prices, unchanged from last month. Platinum and palladium
are mainly used in catalytic converters to cut
climate-warming vehicle emissions.
Toyota Motor Corp and Honda Motor Co saw
their global production slump to around half of year-ago levels
in April after the March 11 earthquake and tsunami wreaked havoc
with their supply chains. [ID:nL3E7GR0GL]
In other markets, the Nikkei ended lower on Friday, while
Brent crude rose on a softer dollar and tensions in the Middle
East.
