A modest gold rise eclipsed by a 4 percent surge in silver on Friday

A modest gold rise was eclipsed by a 4 percent surge in silver on Friday, with investors optimistic about the technical picture and prospects for a Greek deal soon with private bondholders.

Bullion gained even as the euro and other commodities fell, after banking officials told Reuters the agreement between Greece and its creditors was near, which could prevent the debt-stricken nation from tumbling into a chaotic default.

It was gold’s third straight weekly rise. However, even after a 6-percent rally year-to-date, analysts said investors remain cautious about the metal after it briefly entered a bear market in December despite rampant speculation about a break-up of the euro.

“The expectation of a Greek debt agreement certainly takes the dark looming cloud off the market,” said David Meger, director of metals trading at futures brokerage Vision Financial Markets.

“Gold and most notably silver are both having technical breakouts, which are indicative of strong physical demand in the market,” Meger said.

Spot gold was up 0.3 percent at $1,662 an ounce by 2:40 p.m. EST. Its early session low came in tandem with a decline in riskier assets.

U.S. gold futures for February delivery settled up $9.50 at $1,664 an ounce. Trading volume came below its 30-day average for a second straight session, bucking a recent trend of strong turnover.

Gold has had a strong start to the year so far after a 10 percent price drop in December.

SILVER OUTPERFORMS GOLD

Silver rose 3.7 percent to $31.67 an ounce, also up for a third consecutive week.

Technical buying accelerated after COMEX March silver futures broke above stiff resistance at $30.50 an ounce, Meger said.

Meger said physical silver demand has picked up in recent weeks, boosted by retailers chasing better price momentum. – Reuters

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Posted by admin on Jan 21 2012. Filed under Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry