Gold advances on European debt concerns

Gold surged today on renewed debt concerns from the euro area ahead of the EU leaders meeting in Greece where they are expected to introduce new measures to regain financial stability.

Also, speculations that Spain's borrowing cost will rise in bond auctions today as Spain intends to sell 10-30 year bonds worth 3.5 billion euros after the rise of the yield of 10-year bonds to the highest level in nearly eight years.

Although the worries eased to some extent last week but the problem still exists and the euro thereby remains under pressure while gold remains the favorite for investors as a refuge.

Moreover, yesterday's fall in U.S. housing data along with the drop in Asian shares today sparked concerns that global recovery is waning which caused oil to plummet to $76.91 a barrel. The euro slipped for the second day after hitting resistance at 1.2330 yesterday which forced the pair to drop further to 1.2274 today.

On the other hand, the dollar gained for the second day against a basket of major currencies to 86.32 from the day's opening at 86.14, as seen by the dollar index on the daily charts, despite the mixed U.S. data released the previous day and ahead of jobless claims and CPI due later on today.

Yesterday, gold shed $3.90 or 0.32% to close at $1231.55 an ounce. Gold Price was setin London on Wednesday at $1234.50 per ounce during the PM fixing declining from $1235.50 at the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, stood at 1,306.14 metric tons on June 17.

Spot gold is traded at $1231.81 an ounce after recording a high $1234.88 and a low of $1228.87.