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Gold, Silver Investment Demand Up as Dollar Drops

A dollar drop against the euro has spurred an advance in gold futures as silver
climbed to a six-week high.

The U.S. dollar dropped to a two-week low against a basket of major currencies
as a German economic release showed business confidence gained in November and
optimism over a deal on Greece’s debt influenced markets.

Eurozone leaders are awaiting the results of yet another key meeting to determine
the road for cash-starved Greece. Confidence, this time around, is relatively high with the
finance minister of Finland announcing Friday she expects a deal to be reached Monday.
The subsequent euro strength is influencing all markets, including a rise in European
stocks.

Michael Smith, president of T&K Futures & Options in Port St. Lucie, Florida,
said the dollar weakness is supporting gold. Typically, a weaker dollar does support gold
because it makes assets priced in dollars less expensive for buyers who hold foreign
currency.

U.S. gold futures for December delivery gained 0.3 percent to $1,733.50 per troy
ounce in early trading in New York during a half-day following the celebration of the
Thanksgiving holiday in the U.S.

Data compiled by Bloomberg shows holdings in gold-backed exchange-traded
products gained to a record 2,605.3 metric tons as of November 21. The retrospective
Q3 report by the World Gold Council details a drop in investor demand for gold against
Q3 2011, despite an 11 percent rise for the year, but details that inflows to ETF products
have been aggressive. The U.S. Mint, however, sold 67,000 ounces of American Eagle
Gold Coins this month, exceeding the 59,000 ounces sold in all of October, per data from
the Mint.

Silver is outperforming gold for the week, set for 3.5 percent rise. Silver futures
for March delivery gained 0.3 percent to $33.545 per troy ounce. In earlier trading, the
price reached $33.58 per troy ounce, the highest price since October 12.

Technical analysis from Forbes states gold bulls retain the overall near-term
and longer-term technical advantage. The technical consolidation and choppy sideways
action of the past couple weeks is bound by the next price breakout on the upside at the
November high of $1,739.40 per troy ounce. There is strong support at $1,700 with levels
at $1,727.60 and also $1,720.00.

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