Last week, spot gold prices fell for three out five trading sessions, as margin selling sparked a sell off.
On Friday, gold futures finished higher as a weaker U.S. dollar greased the way for gains. Gold for December delivery rose $28.50, or 1.6%, to settle at $1,788.10 an ounce on the Comex division of the New York Mercantile Exchange.
Although the metal had lost around $40 in a two-session losing streak, earlier gains guaranteed gold a 1.8% gain for the week. The rise on Friday put an end to the loosing streak and gold headed to its third consecutive weekly gain.
However, demand for the yellow metal was boosted by the week’s end as investors cautiously increased their appetite for risk, following a slide in Italian borrowing costs. The election of a new Greek Prime Minister also raised hopes of the euro zone debt crisis being averted, contributing to the upward price pressure.
The precious metal rose also in tandem with U.S. equities and the euro as gold prices continued to find buying interest.
Analysts expect gold prices to fluctuate even more until the political uncertainty eases gradually. The easing was slightly evident on Friday, with Italian yields pulling back below the frightening 7.0% mark after the country accepted the new austerity measures, reducing tensions over Europe’s situation for the time being. Friday’s late slide of the USD also helped boost demand for gold.
Looking forward, gold is expected to continue benefitting, at least in schort term perspective, from rising investor concerns over the euro zone debt crisis with the assets safe haven virtue increasing overall demand.
