Gold ticked up in volatile trade on Thursday, boosted by a steadier euro, gains in equities, purchases from jewellers, and hopes that Europe's moves to prop up its ailing banking sector.
Investors will turn their attention to a policy meeting of the European Central Bank, when President Jean-Claude Trichet is like ly to prepare the ground for a pre-Christmas interest rate cut and offer banks further protection against the euro zone's worsening debt crisis.
Gold added $7.39 to $1,647.79 an ounce by 0611 GMT after falling to a low around $1,634 an ounce. It had gained 1 percent on Wednesday on rallies in equities and commodities.
There's a little bit of (physical) buying. But if the market continues moving up, then of course the demand will be a
bit less. The market is very choppy and thin, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
Everybody is expecting Europe to make a decision today, a big step to solve the Greek problem.
German Chancellor Angela Merkel said on Wednesday Berlin was ready to recapitalise its banks if needed following an agreement by European finance ministers to safeguard banks in the face of mounting concerns about a Greek default.
U.S. gold rose $8.5 an ounce to $1,650.1 an ounce.
Bullion rallied to a lifetime high around $1,920 in early September after the euro tumbled on doubts over Europe's ability to solve its debt crisis, but the metal then plunged to a two-month low around $1,534 last week as investors cashed in to cover losses in equities.
Shares in Asia tracked global stocks higher on Thursday after a recovery across a broad range of assets on optimism over Europe's efforts to aid the region's financial sector and U.S. data suggesting the economy could avoid recession.
The euro was steady after Germany said it would help its own banks if necessary and opened the possibility of using a regional bailout fund to strengthen the euro zone banking system.
Friday's U.S non-farm payrolls data will also be watched by investors, who expected good numbers to prompt a rally in risk assets.
It seems that short-term, gold will still be within a range of above $1,600 but below $1,700. It's struggling to find some direction, said a dealer in Singapore.
The U.S. non-farm payrolls data will be an important one that we will be looking at to ascertain the state of the U.S. economy. Myself, I am looking at it from the technical point of view because the uptrend for gold remains intact.
Nonfarm employment probably rose 60,000 as striking Verizon Communications workers return to payrolls, according to a Reuters survey, after being flat in August.
Steady buying by jewellers and investors kept premiums steady at $3 an ounce to the spot London prices in Hong Kong, and at $2 in Singapore -- their highest since at least February.
London Metal Exchange copper rose for a second day on Thursday as Europe's steps to help its financial sector and U.S. economic data point to an improved outlook for industrial metal demand.
Brent crude held above $102 after surging in the previous session as pessimism about weaker demand was outweighed by a surprise drawdown of U.S. inventories and concerns that Libya's largest oilfield could be damaged.
Precious metals prices 0611 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1647.79 7.39 +0.45 16.09
Spot Silver 30.55 0.17 +0.56 -1.00
Spot Platinum 1493.49 8.59 +0.58 -15.50
Spot Palladium 585.72 15.17 +2.66 -26.74
TOCOM Gold 4073.00 57.00 +1.42 9.22 56578
TOCOM Platinum 3718.00 158.00 +4.44 -20.83 18991
TOCOM Silver 74.60 2.00 +2.75 -7.90 987
TOCOM Palladium 1460.00 73.00 +5.26 -30.38 587
COMEX GOLD DEC1 1650.00 8.40 +0.51 16.08 11675
COMEX SILVER DEC1 30.58 0.22 +0.73 -1.18 2212
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months