Gold prices held steady Thursday after a surprisingly large majority of German lawmakers accepted a bigger financial burden in bailing out weak Eurozone economies, Asian buyers lifted demand for physical gold and the dollar weakened.
At one point gold was off 2 percent but strong physical demand from retail jewelry buyers in India helped the yellow metal pare losses. In Singapore and Hong Kong premiums for gold bars were at their strongest since at least February and their highest in a year in India, according to Reuters.
Gold also was supported by investors in exchange-traded funds backed by bullion, like SPDR Gold Trust and iShares Gold Trust, who did not sell despite a recent share price declines.
The 523-85 vote by German lawmakers to strengthen the European Financial Stability Facility in effect increased Germany's guarantees of the bailout fund to $287 million from $168 million. The EFSF is intended to help recapitalize banks, buy bonds and offer loans.
That lifted the euro and refreshed thinning optimism that the continent's leaders may finally be on the road to fencing the coming Greek default.
The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiraling crisis under control, Sony Kapoor, managing director of Re-Define, an economic think-tank, told The Associated Press.
The rising euro cut the dollar, which in turn both weakened its appeal as a safe haven that competes against gold and made the yellow metal less expensive for buyers who do use dollars.
Gold for December delivery on the Comex slipped a modest $3.20 to $1,614.90, a 0.2 percent decline, while gold for immediate delivery was off $32.2 to 1613.94.
Silver for December delivery gave up 4 cents to $30.09, while silver for immediate delivery gave up 96 cents to $30.21.