Gold
rose to a near one-month high on Thursday, as safe-haven buying emerged
after the European Union gave Cyprus an ultimatum to raise billions of
euros it needs to clinch a bailout deal or face a likely exit from the
currency zone.
The metal has risen in five of six sessions on resurgent fears about
euro zone debt fears, and on hopes that the US Federal Reserve will
maintain aggressive stimulus to battle still-high unemployment.
Silver also rose 1.5 percent, on track for its biggest one-day gain in almost two months.
The European Central Bank said it would cut off liquidity to Cypriot
banks and a senior EU official said the bloc was ready to see the
bankrupt island banished from the euro zone. Earlier this week, global
markets slid as Cypriot lawmakers rejected a plan to tax bank deposits
to repay debt.
"The Cyprus situation has ignited purchasing of gold
from the public who are now becoming concerned that the same can happen
where they live," said Miguel Perez-Santalla, vice president at online
precious metals exchange BullionVault.
Spot gold rose to USD 1,616.36 an ounce, its highest since February 26.
It was later up 0.4 percent at USD 1,612.86 by 12:46 p.m. EST ( 1646
GMT).
For the week, gold is set for a gain of 1.4 percent, which would be its biggest one-week rise since November.
Technical analysts said gold looked set for more gains after it broke
above USD 1,613, a downward trendline resistance on daily charts.
US gold futures for April delivery gained USD 4.60 to USD 1,612.10, with
trading volume on track to finish below its 150-day average,
preliminary Reuters data showed.
Safe-haven bids were evident as US equities fell while investors kept an
eye on events in Cyprus. Wall Street declined as weak technology stocks
overshadowed a batch of data suggesting US economic recovery was on the
right track.
However, analysts said weakness from wider markets related to
uncertainty surrounding Cyprus could also pressure gold as they sold
bullion to cover losses elsewhere.
Gold's 12-year bull run has benefited in the last three years from the
euro zone crisis. In September, 2011, fears about Greece's debt problems
sent bullion to its record high of USD 1,920 an ounce while equities
plunged.
Silver jumps, gold ETF houldings steady
Holdings of SPDR Gold Trust, the world's biggest gold-backed
exchange-traded fund, stood unchanged from a day earlier at 1,222.162
tonnes on Tuesday. The ETF on Monday posted its first daily inflow since
early February.
Silver, which is widely used in industrial applications, outperformed
gold after data showed a pickup in the growth of China's vast
manufacturing sector.
Spot silver gained 1.4 percent to USD 29.17.
Among platinum group metals, platinum rose 0.1 percent to USD 1,576.24, while palladium was down 0.2 percent to USD 755.25.
Investors now digested news Switzerland's palladium exports jumped last month to its highest since September 2008.
