Gold prices remained near three-week highs at Friday's midsession as worries about Greece's debt crisis encouraged buying by investors looking for relative safety and the softer dollar underpinned sentiment. Spot gold hit $1,538.10 a troy ounce, its highest since May 4. It was bid at $1,537.30 an ounce at 1:16 pm EDT (1716 GMT) from $1,518.10 late in New York on Thursday.
Benchmark COMEX June gold futures also held near their highest levels since May 4, trading as high as $1,538.50 per ounce. June last traded at $1,537 per ounce, up $14.20. Gold's appeal has been boosted in recent weeks by worries about debt contagion from Greece to Ireland, Portugal and Spain.
The dollar fell to session lows against the euro after European Central Bank Governing Council member George Provopoulos said Greece can handle its debt if it sticks to its aid program. "The dollar is weaker, boosting commodities," said Peter Fertig, a consultant at Quantitative Commodity Research. "Also don't forget the situation in the eurozone, especially the latest comments from an EU official."
In the latest development on the Greek crisis, the head of eurozone finance ministers Jean-Claude Juncker said the International Monetary Fund could withhold the next slice of aid to Greece due next month. "The chances of debt default by Greece are rising," a trader said, adding higher oil prices were also helping gold. Gold is used by investors as a hedge against inflation, which is often triggered by rising oil prices.
Meanwhile, a steep decline in pending sales of existing US homes provided gold with added safe-haven appeal. April home sales dropped far more than expected to a seven-month low, dealing a blow to hopes of a recovery in the housing market. But US consumer sentiment improved in May as job gains offset high gasoline prices. were unchanged on Thursday from Wednesday.
Interest in gold ETFs remains unabated. But that is not the case with silver ETFs, where holdings have fallen by nearly 9 million ounces this week, bringing year-to-date outflows to 42.79 million ounces or 8.4 percent. Spot silver edged higher to $37.86 an ounce from $37.24 late on Thursday, platinum at $1,794.50 was well above $1,764.85 previously, and palladium firmed to $758.72 from $751.45 late on Thursday.
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