Gold and silver advanced on account of rising levels of inflation and the European Debt Crisis. Gold futures gained 0.23 percent to be at USD $ 1504.90 an ounce, while silver futures added 0.03 percent in their value to be at USD $ 35.525 an ounce.
Inflation continues to remain high in several economic powerhouses, which is fueling concerns that the global economy’s recovery might get severely disrupted. The rate of inflation in China was around 5 percent in April, above analyst’s expectations, while the governor of the Bank of England, Mervyn King, has also voiced his concerns about the rising levels of inflation. These concerns have increased the demand of gold as a safe-haven against inflation, fueling its price.
Furthermore, the European Debt Crisis is not expected to improve anytime soon. A fourth review of Greece’s economy has been started by the EU, the IMF and the ECB before Greece is scheduled to receive 12 billion euros in June as part of its bailout package. In the event of Greece unable to fully recover, recon structuring its debt is also on the cards. Such a move would be disastrous for the country as well as for the value of the Euro.
Silver, which is regarded as a cheaper alternative to gold, has taken advantage of the upsurge in gold by recovering from its earlier decline. With gold expected to gain more in its value in the coming days, silver is expected to follow a similar trend.