By Barbara Kollmeyer and Chris Oliver, MarketWatch
MADRID (MarketWatch) — Gold prices edged higher in European trading hours on Friday, supported as the dollar lost its allure amid hopes Europe’s leaders will agree to back a financial bailout for Greece next week.
Gold for December delivery rose $6.20 to $1,734.80 an ounce in electronic trading on the Comex compared to its close of $1,728.40 an ounce in the regular U.S. session.
The metal was headed for a weekly gain of around 0.5%. The ICE dollar index, which tracks the U.S. unit against six other currencies, was largely flat at 79.367 from 79.333 late Thursday.
It’s Spain’s turn to feel debt pain
Spain and Italy have spent months swapping places on the front line of the crisis, and now it may be Spain’s turn again in the spotlight.
Reports that European leaders were moving closer to securing a second bailout for Greece, despite apparent friction between that country and Germany, lifted the euro on Thursday. European stock markets also rose on Friday, in a reflection of that optimism, after a volatile week driven by Greek headlines. A decision is expected to be made on Monday.
Also supportive for gold, data from the World Gold Council on Thursday revealed record investment demand lifted global gold demand to an all-time high in 2011, with China and India generating 49% of demand. Those two countries also accounted for 55% of global jewelry demand for gold last year.
“It is likely that China will emerge as the largest gold market in the world for the first time in 2012,” said Marcus Grubb, managing director for investment at the World Gold Council. “What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”
Among other precious and base metals, silver for March delivery rose 21 cents, or 0.6%, to $33.58 an ounce, and copper for the same month rose 1 cent, or 0.3%, to $3.80 a pound.
April platinum rose $14, or 0.9%, to $1,640.10 an ounce, down $12.10, or 0.7%, while March palladium fell 80 cents, or 0.1%, to $695.80 an ounce.
Kollmeyer is an editor for MarketWatch in Madrid.
Chris Oliver is MarketWatch’s Asia bureau chief, based in Hong Kong.