Gold rebounds as the euro bounces
Precious-Gold advanced on Friday after the euro rebounded from its lowest level in 10 months versus the dollar following EU decision to help Greece, boosting demand by non-dollar holders for the metal as it became cheaper.
Yesterday, gold gained $3.50 or 0.32% to close at $1091.00 an ounce. Gold Price was setin London on Thursday at $1093.00 per ounce during the PM fixing declining from $1093.50 at the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, remained at 1,084.185 metric tons on March 25.
The yellow metal lost more than $10 this week and dropped to 6-week low on Wednesday due to uncertainties that Greece will receive a bailout which caused the euro to decline to 10-month low vis-à-vis the dollar, therefore reducing the appeal of the metal as an alternative investment to the dollar.
However, gold inclined to $1097.00 an ounce today after breaching resistance at $1095 but still below the psychological level of $1100. Gold prices received an upside push from physical buying to the metal from Hong Kong and India ahead of their wedding season in April. On the other hand, gains were minimized due to the dollar's rally against a basket of major currencies as depicted by the dollar index which fell today to 81.75 from yesterday's closing at 82.13. However, the dollar is still traded above strong support at 81.30 that was a strong resistance over the past month where the index was moving between support at 80.07 and resistance at 81.30.
The euro, on the flip side, rebounded today after European leaders agreed to give financial aid to debt-laden Greece with the help of the IMF as suggested earlier this week by Merkel and Sarkozy. The decision is expected to give support to the euro in the coming period after its tremendous fall since December. But the euro may retreat again if other EU countries asked for an aid. Fitch Ratings lowered Portugal's sovereign credit rating to AA-minus from AA on Wednesday and said that it sees negative outlook for the country. Spain is also suffering from high debt along with other macroeconomic problems.
After the optimistic EU announcement, Asian stocks advanced near the highest level in 18 months and oil climbed to $80.87 a barrel from the day's opening at $80.15. With regard to other precious metals, platinum edged up to $1599.50 from the day's opening at $1596.00; palladium soared to $4555 from $451.20; and silver inclined to $16.84 from $16.71, as of 09:15 GMT.