Gold, silver rise on Greece's debt concerns

AP News
Posted: May 24, 2011 4:07 PM
Gold, silver rise on Greece's debt concerns

Gold and silver prices climbed Tuesday as concerns lingered about Europe's debt crisis.

Most metals, oil and other energy products also settled higher after Goldman Sachs said it believes prices for many commodities will improve in the second half of the year.

It was the third day of gains for gold as investors try to determine if Greece's problems could affect the European economy and potentially slow demand for commodities.

Greece is struggling to meet the terms of a $154 billion emergency loan package. The country's main opposition party is opposed to government austerity measures aimed at easing the debt crisis.

The development comes a day after ratings agency Moody's warned that a restructuring of Greece's debt would be considered a default and would hurt the credit ratings of Greece and other debt-laden European countries. Moody's also said it would review 14 British financial institutions for a possible downgrade.

Lind-Waldock senior market strategist Rich Ilczyszyn said investors have bought gold as a way to hedge against the uncertainty of Europe's financial problems as well as indications that China's economy may be slowing.

Gold for June delivery rose $7.90 to settle at $1,523.30 an ounce and July silver rose $1.224, or 3.5 percent, to $36.128 an ounce. Silver is a smaller market so its price swings typically are more volatile.

In its report, Goldman Sachs noted that commodities prices had fallen about 10 percent from highs reached in April, making them more attractive to investors now.

"We continue to expect that economic growth will likely be enough to tighten key supply-constrained markets" in the second half of the year, the report analysts wrote. Goldman Sachs raised its year-end price targets for several commodities, including gold and oil.

In other metals trading, copper prices rose slightly after the Commerce Department said sales of new homes increased 7.3 percent last month to a seasonally adjusted annual rate of 323,000. A healthy real estate market would produce about 700,000 sales a month.

In contracts for July delivery, copper rose 2.15 cents to settle at $4.013 a pound and platinum rose $6.60 to $1,762.50 an ounce. June palladium gained $3.45 to settle at $735.25 an ounce.

Oil benefited from reports by Goldman Sachs, J.P. Morgan and Morgan Stanley that predicted higher prices later this year. The investment banks said a recent 15 percent drop in benchmark crude was a brief pause in what will likely be a long-term rise to near-record levels.

Benchmark crude for July delivery gained $1.89 to settle at $99.59 a barrel on the New York Mercantile Exchange.

In other Nymex contracts for June, heating oil rose 6.16 cents to settle at $2.9213 per gallon, gasoline rose 5.21 cents to $2.958 a gallon and natural gas slipped 0.2 cent to $4.391 per 1,000 cubic feet.

Grains and beans settled lower.

In contracts for July delivery, wheat fell 23.25 cents to settle at $7.7975 a bushel, corn dropped 20.75 cents to $7.3325 a bushel and soybeans declined 1.5 cents to $13.7225 a bushel.