Precious metals performed well this week after getting a boost from last week’s agreement on EU financial aid for Greece, whose debt crisis has been pressuring the euro for weeks to boost the US dollar and push down gold, which is seen as a riskier alternative to the American currency and usually moves inversely to the US dollar.
The yellow metal rose to US$1,120/oz this week after slipping below US$1,090/oz last week amid lack of a consensus among euro zone leaders on financial aid for the debt stricken country. Calls form the European Commission to work out a bailout deal for Greece met with staunch opposition from German Chancellor Angela Merkel, who insisted that Greece did not need aid from the EU and would have to turn to the International Monetary Fund (IMF) before asking fellow euro zone states for help.
Merkel’s stance enjoyed broad public support in Germany as opinion polls continued to show strong opposition to Germany’s participation in any bailout deal.