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Singapore - Gold edged up on Friday from losses of as much
as 2% in the previous session, supported by a softer dollar versus the euro
after Greece won approval for a five-year austerity plan.
But after the steep losses on Thursday, bullion is headed for its worst week since a commodity-wide rout in early May.
The euro rebounded in Asia following news Greece has agreed
with international lenders on an austerity plan that would bring it one step closer to securing much-needed financial aid.
But with fears of a potential Greek debt default still in
the air and the global economy in a patchy state, gold will remain well
supported, analysts say.
"We still are in very uncertain times and it’s likely to
continue until we see greater signs of economic growth globally, particularly
in the United States, and we start to see the European debt situation ease,”
said Darren Heathcote, head of trading at Investec Australia.
"While those problems remain we are likely to see gold well
supported. Investors flee to gold in times of trouble as they have done
consistently for a very long time."
Spot gold rose $2.55 to $1523.25 an ounce in early morning trade after its biggest slide in more than a month on Thursday.
Bullion is down around 1% for the week, its steepest since
losing more than 4% during the commodity rout in early May.
Silver was little changed at $35.20 an ounce. Platinum climbed more than 1% to $1 713.99 and palladium rose 0.7% to $747.47.
Gold has dropped more than 3% since hitting a record high of
$1 575.79 on May 2, but Investec's Heathcote said it could test that level if
the Greek debt situation worsens again.
The Greek government’s austerity plan, including deep
spending cuts and more tax hikes, must still be passed by the parliament at a
vote next week.
News that industrialised nations would release oil from emergency stockpiles for the third time in history in a bid to tame high energy prices that have been weighing on the global economy could cap gold’s gains, but should boost prices of industrial metals.
The news sent oil prices tumbling to four-month lows on
Thursday, but prices have regained some footing on Friday as market players
began gauging how much supply would reach the market.
"Lower oil prices have the potential to boost economic
growth, so you might expect some of the metals and other commodities used in
manufacturing would look at this as a rather bullish move," said Heathcote.
Bullion investors are also paying close attention to
discussions over the US debt limit after budget talks collapsed on Thursday
when Republican negotiators walked out, casting doubt on Washington’s ability
to reach a deal that would allow the government to keep borrowing and avoid a
debt default.
