Forex Pros – Gold prices settled at a one-week high on Friday, as hopes for a new Greek bailout package saw the U.S. dollar weaken against the euro, boosting the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery settled at USD1,540.15 a troy ounce by close of trade on Friday, gaining 0.6% over the week.
It earlier rose to USD1,542.95 a troy ounce, the highest price since June 10.
Following a meeting with French President Nicolas Sarkozy on Friday, German Chancellor Angela Merkel dropped demands that bondholders should share the burden of a second Greek bailout package and signaled support for a voluntary rollover of Greek debt.
Greek Prime Minister George Papandreou reshuffled his cabinet, naming a new finance minister in an attempt to push a harsh austerity package into law.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.66% on Friday to settle at a two-day low of 75.47.
Gold prices often move inversely to the U.S. dollar, as gold becomes less expensive for buyers using other currencies.
Also Friday, ratings agency Moody’s said that it was placing Italy’s sovereign debt rating under review for a downgrade, stoking fears that the region’s debt crisis could spread to other euro zone member states.
Meanwhile, a string of disappointing U.S. economic data last week dampened expectations for a near term tightening in U.S. monetary policy.
Official data showed on Wednesday that manufacturing activity in New York State unexpectedly contracted in June, while an index of manufacturing activity in the Philadelphia-region fell to the lowest since July 2009, underscoring worries over the U.S. recovery ahead of the conclusion of the Federal Reserve’s USD600 billion bond-buying program.
The Fed’s Open Market Committee is to hold its policy setting meeting on Wednesday, which will be closely watched by investors for any clues regarding further monetary easing.
Meanwhile, markets will also focus on a meeting of euro zone finance ministers in Brussels on Monday, while Greece’s parliament is expected to hold a vote of confidence for the current government early in the week.
Elsewhere, silver for July delivery traded at USD35.87 a troy ounce by close of trade on Friday, slumping 0.88% over the week, while copper for July delivery traded at USD4.098 a pound, jumping 1.4% over the week.
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