Gold futures - Weekly review: May 16-20

Forex Pros – Last week saw gold prices climb to a one-week high on Friday, surpassing the USD1,500 an ounce mark, as simmering fears over the euro zone’s debt crisis boosted the safe haven appeal of the precious metal.  

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery settled at USD1,512.85 a troy ounce by close of trade on Friday, climbing 1.4% over the week .

It earlier rose to USD1,516.85 a troy ounce, the highest price since May 13.

Gold prices jumped 1.2% on Friday after ratings agency Fitch downgraded Greece's credit ratings by three notches and said a “soft” restructuring of the country’s debt by European Union policy makers would be considered a default.

Also supporting gold prices were concerns that potential new regional governments in Spain would disclose more debt problems and change the political landscape in the key euro zone periphery country. 

Spaniards go to the polls this weekend, with the ruling Socialist Party expected to suffer some setbacks. Investors often buy gold as a refuge against economic and political uncertainty.

Meanwhile, the World Gold Council said in a report published Thursday that global gold demand in the first quarter rose 11% from a year earlier to 981.3 metric tons.

China’s consumption jumped 47% to 90.9 metric tons, surpassing India’s demand of 85.6 tons, overtaking the country as the world’s largest gold consumer. China now accounts for 25% of gold investment demand, compared with India's 23%.

"In March 2010, we predicted that gold demand in China would double by 2020; however, we believe that this doubling may in fact be achieved sooner," said Albert Cheng, the World Gold Council 's managing director for the Far East.

Gold prices were pressured earlier in the week after the arrest of International Monetary Fund chief Dominique Strauss-Kahn last weekend weighed on market sentiment and after multi-billionaire hedge fund manager George Soros sold almost his entire USD800 million stake in bullion in the first quarter, according to a regulatory filing. 

Elsewhere, silver for July delivery settled at USD35.04 a troy ounce by close of trade on Friday, dipping 0.2% over the week, while copper for July delivery traded at USD4.104 a pound, jumping 3.5% over the week.

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