Precious metals advance, statistics show demand for gold at record

Pessimism dominated the market yesterday after finance ministers delayed their decision on the Greek financial aid, where Greece has finally met the conditions required by international lenders and approved further austerity measures to obtain the bailout package worth 130 billion euros needed to avert a catastrophic default.

Furthermore, the sentiment deteriorated further yesterday after Moody's Ratings threatened to downgrade the credit rating of several global financial institutions, including bank of America and Goldman Sachs, and over 100 financial entities in Europe, which raised fears and jitters in the market, supporting demand for the low yielding U.S. dollar as investors attempt to avert as much risk as possible and in result downside pressures was forced on the metals to trade lower.

Profit taking transactions sent the metal south, where due to the huge losses seen across the board yesterday, investors tended to liquidate their positions on gold in order to cover the sharp losses incurred.

However, with the start of New York session yesterday, optimism returned to markets, while gold and silver started to recover the losses incurred, where after the upbeat housing data from the world's largest economy yesterday the sentiment improved significantly and markets rebounded to the upside on speculation U.S. is on the right track of recovery.

Jobless claims also were better than expected yesterday, where the number of claims fell sharply to 348 thousand claims from 361 thousand, adding more positivity to the markets, which recovered the losses recorded earlier yesterday.

Today, we see that optimism is still seen in the market, where the sentiment was supported by the encouraging comments made by the spokesman for the Greek government, who clarified that Greece expects to get an approval from the euro-area finance chiefs with the start of next week, and then the nation will start the debt swap operations with the private sector.

Gold advanced 0.28% or $4.78 per ounce after the opening of $1728.08 per ounce to currently trade around $1732.86 per ounce. The metal recorded a high of $1735.18 and a low of $1726.85 per ounce.

In addition, the annual report of the World Gold Council showed that Germany and Switzerland led the sharp incline seen in gold prices in 2011, while China and India supported gold further.

Demand for gold surged for the first time above the 4000 metric ton to 4067 ton worth $206 billion in 2011, supported by the Indian demand, where so far in 2012 the nation demanded around 500 metric ton. Expectations suggest that China could demand the most quantity of gold during the coming period.

Silver gained 0.34% or $0.11 per ounce to $33.61 per ounce after the opening of $30.50 per ounce, recording the highest at $33.69 and the lowest at $33.38 per ounce.

Platinum added 0.86% or $14.00 per ounce to $1638.50 per ounce after starting the session at $1624.50 an ounce. The metal set a high of $1643.28 and a low of $1624.00 per ounce.

Palladium on the other hand slipped 0.25% or $1.75 per ounce to $694.50 per ounce after recording the highest at $698.75 and the lowest at $692.30 per ounce, noting that the metal started the session at $696.25 an ounce.