Gold has moved a little way helped by a weaker dollar and buying after the prior session’s fall..
but was still on track for its largest weekly loss since September as euro zone debt contagion worries spooked investors.
A weaker dollar makes dollar-priced commodities such as precious metals more affordable for holders of other currencies.
“I think it’s a bit of a bounce back after a shock yesterday but I wouldn’t get too excited,” Matthew Turner, an analyst at Mitsubishi said.
“There is a bit of bargain-hunting going on; the euro prices are flat and that implies that the dollar gains are to do with the (weaker) dollar.”
Gold has confounded market watchers by refusing to behave like a safe-haven and instead has tracked equities over the past few weeks, but the escalating European debt crisis could see bullion ditch its risk-asset mantle and return to record highs.
“There is a strong argument that this euro crisis should support gold, especially if the solution to it will involve printing money and easing monetary policies, which are inflationary measures. On the other hand these big shocks are making investors nervous,” Turner said.
Bullion is often used as an inflation hedge by investors.
“The longer uncertainty dwells, the more chance there is for bullion to bounce back up, given ultra-low currency yields globally,” VTB Capital said in a research note.