Gold rises on Greece worries, defies dollar rise

By Frank Tang

NEW YORK (BestGrowthStock) – Gold climbed toward $1,160 an ounce on Thursday, defying a stronger dollar against the euro, as lingering worries over Greece’s debt crisis boosted buying of the metal as a hedge against uncertainties.

Bullion’s gains in the face of a stronger greenback indicate that the negative correlation between the metal and the dollar has lessened as problems in the euro zone prompted risk-averse investors pile into gold as a safe haven.

“We have a disconnect between gold and the dollar, and that will continue as long as Greece and the euro zone are still in the news,” said Frank McGhee, head precious metals trader of Integrated Brokerage Services in Chicago.

Euro zone ministers agreed on Sunday to make available 30 billion euros in loans with a further 15 billion from the International Monetary Fund. But uncertainty remained over how the financial assistance would be implemented.

“Until there is a firm resolution, you will continue to see gold to benefit despite euro’s losses.”

Spot gold was at $1,158.90 an ounce at 3:07 p.m. EDT (1907 GMT), against $1,153.90 late in New York on Wednesday.

U.S. gold futures for June delivery settled up 70 cents at $1,160.30 an ounce on the COMEX division of the

NYMEX.

A stronger greenback usually leads to weakness in dollar-denominated gold as it is more costly to non-U.S. investors, and the metal is also seen as an alternative global currency to the U.S. dollar.

Gold priced in euros was boosted from the single currency’s losses as investors focused on Greece’s debt woes, trading just below a record high.

The euro fell (Read more about the trembling euro. ) as the cost of insuring against a Greek default rose, underscoring persistent concerns about Greece’s ability to service its debt. (FRX/: )

Usually this would pressure gold, but the metal has recently broken its usual positive link to the euro this year as debt fears rise.

“Greece is an ongoing story. It can’t be resolved that quickly. There have to be concerns there,” said Credit Agricole analyst Robin Bhar. “That is going to be a reason to hold gold, so there are some positives.”

Wang Tao, a Reuters market analyst, said that further correction is likely if $1,152 is broken.

A minor wave pattern on the intraday chart indicates a possible “c” wave developing that is targeting $1,137.51, subject to a break at $1,144.75, he said.

PALLADIUM, PLATINUM GROUP RETREAT

Among other precious metals, platinum group metals declined after Wednesday’s sharp rally driven by worries about production shortfall and optimism about demand from exchange-traded fund and a global auto recovery.

Palladium fell as traders cashed in gains after the metal rose on Wednesday to a two-year high at $548.50 an ounce. It was last at $541.50 on Thursday against $546.

Platinum was at $1,717.50 an ounce against $1,726, while silver was a penny higher at $18.40 an ounce versus $18.39, its close late in New York on Wednesday..

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(Additional reporting by Jan Harvey in London; Editing by Lisa Shumaker)

Gold rises on Greece worries, defies dollar rise