Gold prices steady on Europe woes,dollar weighs

Dollar index hits one-year high; euro at 16-mo low vs dollar.

Written by Agencies | Singapore | Published: January 6, 2012 1:18 pm

Gold prices were steady on Friday as investors nervous over the euro zone debt crisis sought safety in bullion,offsetting a firm dollar.

The dollar hit a one-year high against a basket of currencies and the euro fell to a 16-month low against the dollar and sterling as worries about the euro zone’s fiscal stability persisted.

Bullion has parted way with riskier assets,with which it had moved in tandem over the past few months,as its safe-haven appeal received a half boost from reviving liquidity at the beginning of the new year.

Liquidity is back in the market,said a Shanghai-based trader. With the Europe outlook still grim,investors would prefer to put their dollars in some safety assets,such as gold.

Spot gold edged up 0.3 percent to $1,626.84 an ounce by 0625 GMT,on course for a weekly rise of 3.7 percent,its strongest in a month.

U.S. gold gained a percent to $1,628.30.

Technical analysis suggested spot gold could retrace to $1,596.24 an ounce during the day,said market analyst Wang Tao.

Although economic data out of the United States in recent weeks has shown solid progress in the fourth quarter,analysts said the global economy will remain overshadowed by the euro zone debt crisis.

Investors will closely watch December’s U.S. non-farm payroll data due later in the day,after a report on Thursday showed that private-sector hiring surged last month and unemployment claims fell.

There have been good data out of the U.S.,but ultimately the U.S. can’t decouple from the European crisis,said Jeremy Friesen,commodity strategist at Societe Generale in Hong Kong.

There are going to be enough reasons to be worried about global growth and the financial system in the next quarter or two,and gold should benefit from that.

Next week Spain and Italy will hold debt auctions,after bond sales by France and Germany this week were greeted with solid demand.

Spot silver inched up 0.1 percent to $29.32 an ounce,headed for a weekly climb of 5.7 percent — its biggest rise in two months.

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