Gold ends up but stronger dollar limits gains

Thu May 24, 2012 5:37pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Gold prices closed higher on Thursday for the first time in four days but the precious metal came off session highs, tracking the euro as it fell against the U.S. dollar on mounting doubt about whether Greece will keep the single currency.

U.S. gold's benchmark June futures settled about half a percent higher at $1,557.50 an ounce, retracing gains that took the contract as high as $1,577.70.

The fickle euro made trading volatile, with a band wider than $26.

Investors were extra cautious ahead of a longer weekend in the United States, which observes the Memorial Day holiday on Monday. Analysts said this made trading more choppy as U.S. gold traders changed positions taken earlier in the day as they worried about what might happen with Greece between COMEX's close on Friday and its reopening on Tuesday.

The spot price of gold, which tracks trades in bullion, was slightly higher late on Thursday at $1,558.25 an ounce, well off the session peak of $1,577.50.

During the day's downdraft, the spot contract fell to as low as $1,551.15 while June touched $1,551.

"Gold had a pretty good short-covering rally today but it was extremely volatile because it followed whatever news that were coming out of Europe on Greece," said George Gero, vice-president at RBC Capital Markets Global Futures in New York.

On COMEX, Gero said, trading was further complicated by the imminent expiry of June as the market's benchmark and its scheduled replacement by the August contract.   Continued...

Jewellery is displayed at a shop that buys gold in the Ginza district of Tokyo August 23, 2011. REUTERS/Toru Hanai