Gold rises, yet set for a weekly decline

Gold advanced for the second day, yet heading for its first weekly decline in two, as the dollar weakened, thereby increasing the appeal of the metal as an alternative investment.

The dollar index, which tracks the dollar movements against a basket of six currencies, slipped to a low of 79.82 compared with the day's opening price at 80.05.

The greenback fell as 30-year treasury yield dropped after the high demand on the long-term notes and ahead of next week's Fed meeting where policy makers may announce an increase in the $600 billion stimulus announced last month.

Accordingly, dollar-dominated commodities rose where oil soared to a high of $88.90 a barrel from yesterday's closing of $88.50, while spot gold surged to a high of $1391.81 an ounce after it recorded a low of $1384.60.

Among other precious metals, platinum inched down to $1679.00 from the day's opening at $1681.50, palladium increased to $741.70 from $740.50 and silver slipped to $28.82 from $28.91, as of 08:50 GMT.

On the other hand, the shiny metal benefited from the debt woes in the euro zone that was exacerbated yesterday when Fitch downgraded Ireland's credit rating for the second time in two months by three notches to BBB+ from A+ due to the expected rise in cost associated with protecting the fragile banking sector and restructuring the huge sovereign debt.

Also, while the Irish Parliament managed to pass a vote for the 6 billion euros budget they are facing pressure as opposition party said it will not vote for the 85 billion-euro aid package.

Eyes today will be on some important data from the United States ahead of the announcement of China's interest rate and latest inflation data which is expected to show that prices rallied 4.7% in November from a year ago which may prompt the central bank to raise interest rate and tighten monetary policy to lower the accelerating prices.

The previous session, gold added $5.70 or 0.41% to close at $1386.80, while gold price was setin London at $1391.25 per ounce inclining from $1382.00 during the AM fixing.

SPDR gold trust, the world's largest exchange-traded fund backed by bullion, edged down to 1,293.77 metric tons on December 9 from 1,295.29 on December 8.