Gold heads for the sharpest weekly loss since May

Gold rebounded slightly at the end of the week after three consecutive sessions of decline, yet heading for the sharpest weekly decline since May, after the Group of 20 Chiefs decided to coordinate their efforts to combat the crisis.

Spot gold is traded around $1740 an ounce, close to the day's opening level, after recording a high of $1755.02 and a low of $1720.10.

The shiny metal halted its drop after the G20 chiefs pledged strong and coordinated international response to address the renewed challenges facing the global economy, where they also vowed to help in easing pressure on European banks.

Despite the vow by world leaders, gold is heading for the third weekly decline and probably the first monthly drop in two as the concerns regarding the global recovery path and escalating European debt crisis damped demand on commodities and equities.

This week, S&P downgraded Italy's credit rating by one notch to A from A+ with a negative outlook and Moody's downgraded eight Greek banks. In addition, weak fundamentals from major economies continued to give vivid signs that global recovery is fading.

Now, central banks are thinking of new stimuli to boost their economies after adopting sharp austerity measures that led to shaving growth and raising unemployment.

The Fed Chairman, Ben Bernanke, said on Tuesday that there are significant downside risks to the economic outlook of the U.S. and said the Fed would sell $400 billion of short-term securities and buy an equivalent amount of long-term securities to reinvigorate the economy.

Gold was supposed to respond positively to the turmoil in markets as a safe haven asset, yet the strong rise in the dollar capped demand on all dollar-denominated commodities.

Crude oil fell to a low of $79.65 a barrel from the week's starting level of $87.50.

Among other precious metals, sliver edged down to $34.83 from the day's opening of $35.80, platinum retreated to $1692.00 from $1695.00 and palladium rose to $648.00 from $643.50, as of 08:00 GMT.