Gold rises on EU pledge; eyes worst quarter in 8 yrs

Gold rose more than 1 percent on Friday, tracking a surge in the euro after European leaders moved to bring down soaring borrowing costs in Italy and Spain, helping ease fears over the region’s debt crisis.

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By (Reuters)

Published: Fri 29 Jun 2012, 4:16 PM

Last updated: Tue 7 Apr 2015, 11:25 AM

But gold is still on track to post its worst quarter since 2004, as a growing global economic slowdown from Europe to China pushed investors to safer havens such as the dollar.

Spot gold was up 1.1 percent at $1,568.46 an ounce by 0700 GMT, after hitting a session high of $1,571.89. U.S. gold gained 1.2 percent to $1,568.90.

Gold jumped as the dollar wilted against the euro after leaders of the 17-nation euro zone agreed the region’s rescue funds could be used to stabilise bond markets without forcing countries that comply with EU budget rules to adopt extra austerity measures or economic reforms.

That provided a big relief to investors in markets from commodities to equities, who had low expectations the ongoing summit of European leaders would yield concrete solutions to solve the euro zone debt crisis now running into its third year.

First gain in 5 months

Friday’s rise has helped gold erase losses for June, and it is on course to post its first gain in five months.

But for the second quarter, bullion is still down about 6 percent, its steepest loss since 2004.

Gold has fallen more than 12 percent from the 2012 peak of around $1,790, and 18 percent from an all-time high above $1,920 reached in September 2011.

What would support gold’s strength in the second half of 2012 would be possible further weakness in the dollar, with the US central bank likely to support a patchy recovery in the world’s top economy with more stimulus measures, analysts say.

The physical market also saw some buying from jewellers from China and other parts of Asia, said Ronald Leung, director at Lee Cheong Gold Dealers in Hong Kong.

Leung said premiums on gold bars in Hong Kong rose around 20 cents to about $1.20-$1.60 an ounce above London prices.

(Reuters)

Published: Fri 29 Jun 2012, 4:16 PM

Last updated: Tue 7 Apr 2015, 11:25 AM

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