(REUTERS) -- Gold rose on Thursday, a day after it broke ranks with riskier assets, on track to extend to a fifth straight day of gains in the face of a sharp fall in the euro on renewed European debt fears.
The metal reversed initial losses that were pressured by a report showing growth in the U.S. services sector only picked up slightly in December.
On Wednesday, gold hit a two-week high and appeared to buck a trend of moving in lockstep with the euro and the S&P 500 U.S. stock index. Gold has now recovered from last week's losses that briefly sent it into a bear market.
I expect we are going to see money from hedge funds and money managers to return to gold as a safe haven by the end of the month, said George Nickas precious metals broker at commodities firm FCStone.
It's just a matter of time for the gold buyers to return to the market as the European crisis hasn't been resolved, he said.
Spot gold gained 0.2 percent to $1,613.44 an ounce by 12:11 p.m. EST (1711 GMT).
U.S. February gold futures rose $2.30 to $1,615 an ounce.
Trading volume was strong for a third straight day, preliminary Reuters data showed. Analysts said stronger volume signaled renewed buying interest after gold fell sharply in thin holiday volume.
Earlier in the session, gold was under pressure as the euro slipped to its lowest since September 2010 against the U.S dollar as lingering concerns about euro zone debt crisis prompted weakness in the shared currency.
The 25-day correlation-log between spot gold and euro was near a one-year high reached last week, indicating strong positive link between bullion and the common unit.
It is a risk on/risk off trade for gold. I expect gold to experience a volatile period throughout the first quarter, and this relates to the euro zone crisis, said Peter Fertig, consultant at Quantitative Commodity Research.
Silver edged up 0.1 percent to $29.18 an ounce, while platinum slipped 0.4 percent to $1,410.74 an ounce. Palladium dropped 1.4 percent to $637.22 an ounce.