Gold prices inch higher, euro slumps

23 May 2009 | 07:08 Code : 19170 Geoscience events
Gold prices closed slightly higher Friday, finishing the week with a gain amid signs...

Gold prices closed slightly higher Friday, finishing the week with a gain amid signs that a drop in consumer prices is moderating.Energy and agriculture futures retreated.Gold for June delivery added $2.90 to settle at $931.30 an ounce on the New York Mercantile Exchange. Prices finished higher for the second straight week, adding 1.8 percent on top of a 3 percent gain last week. For the year, gold is up 5.3 percent.July silver shed 3 cents to $14.01 an ounce, while July copper futures dipped less than a penny to $2.0175 a pound.The euro plunged against the dollar Friday after official data showed the eurozone economy slumped a record 2.5 percent in the first quarter.At 2100 GMT, the euro was trading sharply lower against the US currency, at $1.3490, from $1.3638 late Thursday in New York.The single European currency also tumbled against the Japanese currency, to 128.45 yen from 130.69 yen.The dollar fell to 95.19 yen from 95.80 yen late Thursday.The Labor Department said consumer prices were flat in April after dipping 0.1 percent in March. While the improvement was modest, it did ease some of the market’s concerns about rapidly falling prices, or deflation.Investors are mindful that as the economy improves, buoyed by the government’s massive stimulus efforts and the steady flow of money into the financial system, inflation could reignite. Part of gold’s appeal is that it shelters investors from the potentially damaging effects of inflation on other assets, like the dollar. So any sign that prices are stabilizing tends to give gold a boost.However, the dollar was higher against other major currencies Friday, which muted some of the gains in gold.Inflation can be triggered by a weak dollar. With any threat of rapidly increasing prices still a long way off, investors have been reluctant to lift gold prices much further until the economy’s future becomes more clear.On Wall Street, investors sent stocks moderately lower.The economy remains deeply troubled despite signs that its decline is slowing, and investors have become more uncertain in recent sessions that the market’s two-month spring rally was justified. – Agencies

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