Gold reaches $1,180 as physical demand keeps rising, silver and platinum follow
Reported by Proactive Investors on Saturday, 31 July 2010 (on July 31, 2010)
Gold prices climbed at the end of the week, improving to US$1,180/oz after rising to US41,170/oz on Thursday. The yellow metal was recovering from the sharp falls it experienced this week as fears over Europe’s debt crisis and the slowdown of the economic recovery in the US were subdued by strong economic and corporate data released this week.
A survey by Bloomberg predicted an increase in gold prices next week, due to higher physical demand spurred by the currently low prices that dipped below US$1,160/oz at one point during the week.
Gold has been on the rise this year, hitting all time highs of US$1,265/oz in June as investors were increasingly pouring money into safe haven assets such as precious metals to hedge against the risks associated with volatility in equity and currency markets. Stock markets in Europe remained under pressure from the European debt crisis, which intensified after Greece accepted a multi-billion rescue package from the EU and the *International Monetary Fund (IMF)* to avoid bankruptcy, which was followed by speculation that Portugal and Spain could be next.
Concerns over the health of the banking system in Europe subdued after last week’s stress test results showed that just 7 out of the 91 banks tested failed to show they would withstand another crisis. At the start of this week, Basel Committee on Banking Supervision said it would relax its liquidity and capital requirements in its draft Basel III reform, providing strong support for the banking sector. Banks* UBS (NYSE:UBS)* and *Deutsche Bank (NYSE:DB) *posted strong quarterly results to further bolster the banking shares.
In another key economic update, the Fed’s Beige Book survey of regional economic conditions revealed growth in 10 out of the 12 Federal Reserve districts, however, the growth rate was “modest,” while the housing market and manufacturing remained weak. Employment data was mixed, revealing an increase of 81,000 in continuing jobless claims to 4.56 million, while initial claims decreased by 11,000.
Friday’s data was mixed as while Q2 US GDP failed to match expectations with a decline to 2.4% instead of the projected 2.5% and New York ISM index fell to 58.4 in July from 69.3 in June, the University of Michigan consumer confidence index was revised upwards to 67.8 from a previous reading of 66.5 for July and the *Chicago PMI (purchasing managers index) *beat expectations with an improvement from 59.1 to 62.3 in July.
The markets were still lacking direction with the *Dow Jones* and* S&P 500* indexes in the US closing flat on Friday to post modest weekly gains, while the* FTSE 100* dropped 1% over the past five trading days.
Gold lost support at US$1,200/oz last month after *US CPI (consumer prices index) *declined for the third month in a row, hitting bullion’s appeal as an inflation hedge.
*Gold* last traded at US$1,181/oz. *Silver *and *platinum* climbed to US$17.97/oz and US$1,569/oz respectively.
Fresnillo's Lomelin Sees Demand for Silver Increasing
Source: Bloomberg
Aug. 3 (Bloomberg) -- Jaime Lomelin, chief executive officer at Fresnillo Plc, talks about the outlook for silver and gold. The world's third-largest silver producer said first-half profit rose 82 percent after output and prices of the precious metal incr
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