Gold rose in Europe yesterday and headed for its best weekly performance since early December after the Federal Reserve signalled a continuation of its ultra-loose monetary policy, pushing the dollar lower against the euro.
Spot gold was up 0.3 per cent at $1,724.70 an ounce at 1023 GMT, while US gold futures for February delivery were down $1.90 an ounce at $1,724.80. Spot prices have risen 10 per cent this month, recouping December's hefty losses.
The precious metal surged towards $1,730 an ounce on Thursday after the Fed said it planned to keep interest rates on hold until at least 2014 and signalled it would be ready to take further measures to stimulate the economy.
"After the Fed chairman's vow to keep the rates low until late 2014, strong buying interest was visible," said Pradeep Unni, senior analyst with Richcomm Global Services.
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"Anxious investors have joined the fray of speculators who are now increasingly concerned by currency depreciation, as global central banks use easy monetary policies to flood markets with cash."
The dollar eased 0.3 per cent against the euro, further helping gold, which usually benefits from weakness in the US unit. The euro hit a five-week high on Thursday.
A US gross domestic product report is expected to show growth accelerated to a 3 per cent rate in the fourth quarter, from 1.8 per cent in the third. It will be watched for its impact on the dollar, a key determinant of gold prices.
The euro is still under pressure from concerns over Eurozone debt, as the markets await a breakthrough in Greek debt talks.