Gold rose 1 per cent yesterday, erasing early losses, as reservations over this week's bailout plan for debt-laden Greece and concerns over negotiations to raise the US debt ceiling lifted interest in the metal as a safe store of value.
The precious metal retreated from this week's record high at $1,609.51 (Dh5,911.65) an ounce after European leaders agreed a rescue package for Greece on Thursday, boosting appetite for assets seen as higher risk, like stocks, at the metal's expense.
However, it has since rebounded as investors moved back into safe havens like gold, German bunds and the Swiss franc as they digested the details of the plan.
12 per cent rise
Spot gold rose as high as $1,604.81 an ounce and was up 0.9 per cent at $1,602.50 an ounce at 1.20pm GMT. Prices have risen more than 12 per cent so far this year.
The German Bund future turned positive as enthusiasm over the Eurozone rescue plan gave way to concerns it will not be enough to get the heavily-indebted country back on a sustainable fiscal path and ring-fence contagion.
"While yesterday's agreement was as comprehensive as it could possible be, many legal and political issues need to be ironed out and the crisis is far from solved," said Swiss bank UBS in a note.
"Although gold could lose steam in the short term, Europe will remain a primary catalyst for further gains over the medium term. That gold hasn't reacted to any great extent suggests that many investors are not fully convinced by yesterday's developments."
from / Gulf News