Precious metals may gain due to Libya crisis

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Further concerns about European debt and demand will affect prices.

The gold price may see a rise in London for the first time in five days in as fighting in Libya and concern about European debt increases demand for the precious metal as an alternative investment, reports Bloomberg.

Gold reached a record $1,447 (£901) an ounce on March 24 as fighting in Libya, the Japanese nuclear crisis and concerns about European debt boosted demand for a protection of wealth.

Such geopolitical factors are sure to have affected precious metal prices, both as a commodity and for use in jewellery designs. Peter Fertig, owner of Quantitative Commodity Research in Germany said: “The situation in Libya is quite open and far from over. There is also uncertainty [on Europe’s debt issues].”

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Immediate-delivery bullion has risen 0.2 percent, to $1,421 (£885) an ounce in London. Prices are little changed this quarter after gaining the previous nine quarters.

Bullion yesterday traded near a one-week low on signs the U.S. economy is improving and amid speculation of tighter monetary policies. St. Louis Federal Reserve Bank President James Bullard yesterday said the central bank may need to trim debt purchases because the U.S. recovery has gained strength.

With a view to silver, silver for immediate delivery gained 1 percent to $37.43 (£23) an ounce, having reached $38.165 (£23.75) on March 24, the highest level since February 1980, the year the metal reached a record $50.35 (£31.35) in New York. The silver price is up 21 percent this year, heading for a ninth straight quarterly advance.

Palladium was also up 0.3 percent at $757 (£471) an ounce, and platinum increased 0.6 percent to $1,750 (£1,089) an ounce. Overall prices are down 1.1 percent this quarter.

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