Forexpros – Gold futures rebounded from a three-week low on Friday, paring a weekly loss as the previous day’s sharp drop created buying opportunities for investors, while ongoing fears over the euro zone’s sovereign debt crisis continued to support prices.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery settled at USD1,811.65 a troy ounce by close of trade on Friday, retreating 2.58% over the week, the second consecutive weekly decline.
Gold futures tumbled nearly 2.1% on Thursday to hit USD1,763.65 a troy ounce, the lowest since August 26 after the European Central Bank announced that it would provide additional dollar liquidity to euro area lenders in a move coordinated with the Federal Reserve and other major central banks.
Gold prices regained strength on Friday, jumping 1.8% as Thursday’s steep decline triggered some bargain buying from traders and as a meeting of European Union finance ministers in Poland failed to produce an agreement on how to resolve the region’s escalating debt crisis.
Fears over a possible Greek debt default also underpinned prices as EU ministers postponed a decision to release the next tranche of aid to the debt-laden country until next month.
Gold prices found further support after ratings agency Moody’s said it would extend its three-month review of Italy’s sovereign debt rating because of “the increasingly challenging economic and financial environment and fluid political developments” in the euro zone.
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Strong physical demand in India also lent support as consumers began stepping up purchases of bullion ahead of the gold-buying wedding and festival season due to start in late-September.
Meanwhile, global financial service provider HSBC raised its average gold price forecast for 2012 to USD2,025 an ounce.
In a report published Friday, the lender said, “The euro zone debt crisis, currency wars, and deep uncertainty among investors are among the factors driving prices higher.”
Elsewhere on the Comex, silver for December delivery traded at USD40.73 a troy ounce by close of trade on Friday, slumping 1.78% on the week, while copper for December delivery settled at USD3.928 a pound, falling 1.1% on the week.
In the week ahead, gold traders will be focusing on developments in the euro zone and the outcome of the Federal Reserve’s two-day policy setting meeting on Wednesday for any signs that the bank is looking at providing fresh monetary stimulus to support the U.S. economy.
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