• Home
• /
• Markets

Gold up for 6th day on Greece fears, hopes of easing

Gold rose on Friday for a sixth consecutive session as investors bet on additional stimulus by central banks and hedged against economic uncertainty ahead of key Greek elections on Sunday.

The metal gained 2 percent on the week, underpinned by hopes of further US monetary easing on signs that the American economy’s recovery is on shaky ground. Friday’s weak US manufacturing output and consumer sentiment data fed that attitude.

Gold’s investment appeal as a hedge against economic weakness increased as central banks stood ready for any turmoil from Greece’s elections, which could be the country’s first step toward a chaotic break from the euro zone.

“The more the debt crisis accelerates in Europe, the more likely we will see the fear trade back into gold, and the more likely we are to see the Federal Reserve is going to use the opportunity to initiate economic stimulus,” said Jeffrey Sica, chief investment officer at SICA Wealth Management LLC, which oversees $1 billion in assets.

Spot gold was up 0.3 percent at $1,626.61 an ounce by 3:05 p.m. EDT (1905 GMT). The last time bullion posted a six-day winning streak was in August.

US COMEX gold futures for August delivery settled up $8.50 at $1,628.10 an ounce, with trading volume about 60 percent below its 30-day average, preliminary Reuters data showed.

On charts, gold extended gains above its key support at its 50-day moving average, but analysts said the metal must break above its one-month high in the $1,640 area to rise further. Bullion rose toward that level several times recently but failed in each attempt.

ALL EYES ON GREECE, EURO ZONE

Gold’s price volatility could rise, depending on the outcome of the Greek elections and any subsequent commitment by euro zone countries to deal with the region’s economic crisis.

“While the broad macroeconomic and political picture appears to be gold-friendly, we do not believe investors will take substantial positions ahead of the Greek elections,” said James Steel, chief commodity analyst at HSBC.

“Should difficulties in funding (euro-zone) fiscal positions materialize, investors could seek hard assets including gold,” Steel said.

Among other precious metals, silver was up 0.3 percent at $28.67 an ounce.

Investors’ confidence in silver was battered by two sharp corrections in 2011, which saw the metal lose a third of its value in the six sessions after it hit record highs last year. It fell 36 percent in three days in September.

Spot platinum was down 0.5 percent at $1,478.75 an ounce, while spot palladium was down 1.3 percent at $621.97 an ounce.