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Gold edges higher as dollar softens, stocks recover

LONDON - Gold prices edged higher on Thursday, recovering from the previous day’s two-week low in line with stock markets and other commodities, but uncertainty over when Spain would request a rescue programme limited investors’ confidence.

European shares recovered some ground lost after fierce protests in Spain and Greece against austerity measures roiled markets on Wednesday, while oil prices firmed and the dollar took on a slightly weaker tone.

Spot gold was up 0.2 percent at $1,755.69 an ounce at 0952 GMT, while U.S. gold futures for December delivery were up $5.00 an ounce at $1,758.60.

The precious metal is on track to end September with its largest quarterly gain in more than two years, of nearly 10 percent, after the Federal Reserve unveiled a third round of bullion-friendly monetary stimulus measures earlier this month.

Gold fell sharply on Wednesday as worries over the euro zone debt crisis, which pressured the euro, prompted some investors to cash in gains ahead of quarter-end. It later recovered some ground, but remained down 0.5 percent on the day.

Spain is set to present its 2013 budget draft later on Thursday. A credible budget combined with comprehensive structural reforms could build the foundation for meeting conditions for a Spanish aid package and intervention by the European Central Bank in the bond market, analysts said.

Spanish government bond yields were stable as uncertainty over whether the troubled country would ask for a bailout kept investors edgy ahead of the unveiling of its budget.

ETFs report outflows

Holdings of gold exchange-traded funds, which issue securities backed by physical metal, eased back from record highs on Wednesday, with products tracked by Reuters reporting an outflow of nearly 340,000 ounces.

The products are still on track for a ninth straight week of inflows, however.

Demand in major consumer India remained soft, meanwhile, as high prices curbed interest in the metal.

Among other precious metals, silver was up 0.3 percent at $34.04 an ounce, spot platinum was up 0.3 percent at $1,631.90 an ounce, and spot palladium was up 0.4 percent at $627.70 an ounce.

Silver has been the star performer of the precious metals this quarter, rising 24 percent so far, its best performance since the last quarter of 2010.

Platinum prices are set to end the quarter up 13.2 percent, while palladium is heading for an 8.2 percent gain. Platinum group metal prices have been lifted by unrest in South Africa’s mining sector, where violence at a mine operated by number three producer Lonmin killed 45 people.