Gold rebounds ahead of EU Finance Minister's meeting

The yellow metal pared some of Friday losses before the EU finance Minister's two-day meeting starting today in Brussels on expectations that European chiefs will not succeed to set debt- reduction targets after they failed last month to expand the 750 billion-euro rescue package.

Gold benefited last year from the debt crisis in Europe which triggered safety demand on gold and thereby with the continuation of the dilemma this year gold is predicted to find a solid ground. Portuguese bond yields are still at the highest level in 11 years on concerns the debt crisis will affect the region's recovery.

On Friday, safe-haven assets, including gold and dollar, in addition to oil slipped after President Hosni Mubarak stepped down to ease concerns in Egypt the started since January 25 causing rise in gold prices.

The previous session, gold shed $6.70 or 0.49% to close at $1355.93 an ounce, while gold price was setin London at $1359.00 per ounce declining from $1364.00 during the AM fixing.

The Egyptian armed forces announced suspending constitution and dissolving Parliament, to make steps that were welcomed by Egyptian people.

The ease of worries in Egypt helped Asian shares to advance today, where the better-than-estimated Japanese growth figures gave another impetus to equities.

The Japanese economy contracted 1.1% annually from the revised 3.3% expansion, yet better than forecasts of 1.9% contraction. On the quarter, the contraction was 0.3% compared with the revised 0.8% expansion and median estimates of 0.5% contraction.

On the other hand, the US dollar declined against a basket of major currencies, as depicted by the dollar index which fell to a low of 78.27 from the day's opening level at 78.57, while oil steadied at $85.50 a barrel.

Spot gold is traded at $1360.50 after recording a high of $1360.81 and a low of $1354.00.

The shiny metal may get some support if Chinese inflation data due this week showed a rise as it will boost demand on gold as inflation hedge.

Among other precious metals, platinum inched up to $1823.50 from the day's opening at $1822.00, palladium edged up $821.40 from $815.20 and silver inclined to $30.08 from $29.86, as of 08:15 GMT.