Gold heads for the second weekly advance on mounting European debt concerns

Gold rose on Friday trading, heading for the second weekly advance, as the escalating in the euro area increased the appeal of the metal as a safe haven asset.

The previous session, gold shed $6.40 or 0.42% after closing at $1519.80 an ounce, while gold price was setin London at $1518.50 per ounce declining from $1521.50 during the AM fixing.

Spot gold is traded at $1527.05 an ounce after reaching a high of $1527.50 and a low of $1518.25, yet it is facing downside pressure from momentum indicators.

Among other precious metals, sliver inched up to $37.92 from the day's opening of $37.81, platinum ticked down to $1780.50 from $1783.00 and palladium soared to $755.00 from $752.00, as of 07:15 GMT.

Gold is taking advantage of the escalating debt woes in the region, especially as the Greek agony may end with a grim scenario either default or restructuring.

With the refusal of many ECB officials to the idea of restructuring debt speculations increased that Greece might be the first euro-area economy to fall in default.

Jean-Claude Junker, who heads the euro-area finance ministers, said that probably by next week there will be approval for new measures to help Greece, while yesterday fears reignited when he mentioned that the IMF may not give Greece its share of the aid next month.

Concerns elevated when Fitch lowered Greece's credit rating by three levels to B+ from BB+, keeping the door opened for further cuts, stating that the soft debt restructuring would provoke a default.

The contagion also spread to other countries which caused Standard & Poor's to cut Italy's outlook to negative, while Belgium's debt outlook was also revised to negative by Fitch.

European confidence due today is estimated to show a decline in May to 105.7 from 106.2, referring that German business confidence fell in March and April before stalling in May.

On the other hand, the dollar's stop to its rally helped the metal to gain some strength, where the downbeat US data raised expectations the Fed would keep interest rate low till the end of the year to boost recovery that started to slowdown.

This week witnessed the drop in US durable goods followed by lower-than-expected annualized 1q GDP along with rise in initial jobless claims, while today's data is predicted to show that US personal spending slowed to 0.5% in April from 0.6%.