Gold bullion for immediate delivery closed the week in London above $670 per ounce before rising again to a fresh 15-day high in late US trade.
Rising more than 2.1% against the Dollar from last Friday, the gold market put on its best performance in four weeks.
Gold priced in Pounds Sterling rose faster still, closing London above £338.50 per ounce on news that British banks – desperate to join the boom in private equity buy-outs of listed stocks – are now lending money to non-financial corporations at less than official UK interest rates.
The broad supply of Euros (M3) is now growing at its fastest pace since spring 1983. (Read more about the fundamental problems facing the European single currency here...)
Friday's $10 move came on news that the European Central Bank – a major gold seller over the last two years – does not plan to sell any more physical gold bullion until at least September.
A signatory to the Central Bank Gold Agreement of 2004, the ECB conducted gold sales of 37 tonnes over the last two months, it announced in a press release.
In the CBGA year so far, which started in Sept. '06, the ECB has sold 60 tonnes "in full conformity" with the Agreement, it said.
"The bulls [now] have free rein to move gold up," responded David Gornall, head of bullion dealing at Natixis Commodity Markets in London.
"You are effectively removing one source of the selling pressure."
Adding to fresh gold investment demand this week, the metal's sharp recovery from its two-month low of $651 per ounce came alongside strong gains in global stock markets.
In Tokyo, the Nikkei share index closed the week at a 3-month high.
The Dow Jones in New York hit a fresh all-time high, driven higher by the promise of a $15 billion share buy-back from Wal-Mart, the giant US retailer.
Spot gold prices also rose on mixed – and unsettling – economic news from Washington.
The world's largest single economy, the US got data this week showing average earnings rising much slower in May than Wall Street analysts had expected.
Personal spending, however, rose ahead of forecast – suggesting that US consumers continue borrowing money to plug the gap between income and expenditure.
The much-awaited non-farm payrolls report showed jobs growth of 157,000 last month against expectations of 140,000.
But so-called "core" inflation in personal consumer spending ticked only 0.1% higher. The consensus on Wall Street had been for a 0.2% increase.
"I believe that the risks to the inflation outlook are primarily to the upside," said Federal Reserve governor Randall Kroszner at a conference on Friday.
But after 17 interest-rate hikes to the current 5.25% level, the pressure to cap or even cut the cost of borrowing is mounting.
US home sales pending in May dropped 3.2% in May from April – which saw a 4.9% drop from March.
The largest US mortgage lender, Countrywide, this week reported first-quarter profits down by more than one-third. (Could lower US interest rates save the housing market? Find out here...)
"Higher oil prices also pose an upside risk to inflation," Kroszner went on, echoing comments made in the latest Federal Reserve minutes, released on Wednesday.
Crude oil prices dropped $3 per barrel this week, however, moving more than 4% lower as a strike by oil workers in Nigeria ended.
And as the rally in gold proved once again that the metal is now moving more in step with equities than commodities, physical demand for gold bullion also rose in the jewelry and gold-coin sectors.
The MKS Finance refinery in Switzerland said it's now fully booked for the second month running.
Chief gold trader, Bernard Sin, told Bloomberg that demand from India and south-east Asia picked up strongly on the setback to gold prices in May.
"Those who need immediate delivery have to be in a queue," he said.
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