Gold rises as the dollar retreats

The shiny metal gained for the third day as the drop in the dollar enhanced demand on the metal as an alternative investment.

Spot gold is traded at $1385.40 an ounce after recording a high of $1385.87 and a low of $1380.62, while oil is traded above $91.00 a barrel.

Among other precious metals, platinum dipped to $1768.60 from the day's opening at $1773.70, palladium inched up to $794.30 from $790.70 and silver soared to $29.75 from $28.68, as of 07:50 GMT.

The dollar index, which tracks the dollar movements versus a basket of major currencies, dropped to a low of 80.60 from the day's opening at 80.83.

On the other hand, the euro advanced continued its rise today after yesterday's upbeat news that Japan will buy 20% of European bonds of highly indebted nations to give support to euro area to combat debt crisis.

Optimism boosted the euro before Spanish bond selling tomorrow on speculations China will buy as it promised to help in easing debt woes in the region.

Today, Portugal will sell up to 1.25 billion euros of 2014 and 2020 bonds.

Yet, concerns remain ahead of European finance ministers meeting next week. Axel Weber, the head of the Bundesbank and ECB council member, said it is too early to say that debt crisis is contained and outlook is cautious.

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.

The previous session, gold added $5.30 or 0.39% to close at $1381.27, while gold price was setin London at $1374.00 per ounce declining from $1381.00 during the AM fixing.

SPDR gold trust, the world's largest exchange-traded fund backed by bullion, edged down to 1,271.46 metric tons on January 11 from 1,272.68 on January 10.