Gold advances amid European debt concerns

The shiny metal gained for the second day on concerns European debt crisis would be exacerbated which emboldened investors to buy the metal as a safe harbor.

The previous session, gold added $6.20 or 0.45% to close at $1375.42, while gold price was setin London at $1368.25 per ounce unchanged from the AM fixing.

SPDR gold trust, the world's largest exchange-traded fund backed by bullion, edged up to 1,272.68 metric tons on January 8 from 1,271.16 on January 7.

Meanwhile, there are many talks that Portugal, which suffers from the highest budget deficit in the euro area, will ask for a bailout from the EU and IMF as the Portuguese government is unable to raise capital.

It was mentioned yesterday that France and Germany will put pressure on Portugal to accept a bailout to ease pressure on financial markets, especially with the rise in bond yields and cost of insuring against default in the debt-plagued nations in addition to the drop of the euro to four-month low vis-à-vis the greenback.

Today, the Japanese finance minister said Japan will trail China in buying European bonds of highly indebted nations to give support to Ireland, yet the news could not brush doubts aside.

After bond selling from Germany, France and Portugal last week, Spain, Italy and Portugal will sell long-term bonds starting from tomorrow.

Last year, the European debt woes pushed up gold prices by 30%, thereby with the continuation of that scenario this year gold prices may remain high.

Spot gold rose to a high of $1378.29 an ounce and a low of $1373.70 from the day's opening at $1375.32, while oil is hovering around $89.00 a barrel.

Among other precious metals, platinum dipped to $1741.40 from the day's opening at $1744.20, palladium inched up to $756.20 from $755.20 and silver soared to $29.20 from $28.08, as of 07:30 GMT.