Gold rebounds, but stays on track for weekly loss

Fri May 25, 2012 10:02am EDT
 
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By Jan Harvey

LONDON (Reuters) - Gold prices rose back above $1,565 an ounce on Friday, snapping four sessions of losses and temporarily decoupling from the euro, as investors saw the precious metal's current price as a buying opportunity after its recent fall.

Spot gold was up 0.5 percent at $1,565.61 an ounce at 9:38 a.m. EDT (1338 GMT), having fallen towards $1,530 earlier this week as worries that Greece could be set to exit the euro zone hurt the euro and boosted interest in the dollar as a haven from risk.

It remains on track for a 1.9 percent loss this week.

"The $1,540 level held intact yet again earlier this week, and even though there is no overwhelming physical support, or indeed investor interest, these levels are starting to look attractive, with some modest buying on the lows," VTB Capital analyst Andrey Kryuchenkov said.

The euro surrendered early gains to hit another 22-month low on Friday after Spain's wealthiest autonomous region, Catalonia, pleaded for help to refinance its debt. Worries over the euro zone's financial health have plagued the single currency this year. <FRX/>

Concerns about Greece leaving the euro zone prompted macro funds, real money and institutional investors to ramp up selling of the currency this week after an inconclusive election left the country at risk of bankruptcy.

European shares slipped, meanwhile, as worries about a possible Greek exit spooked investors. .EU

Such fears were instrumental in sending gold to a record high last year, but since January it has tended to react negatively to bad news from the euro zone, as investors turn to the dollar, Treasuries and German bunds as alternative havens.   Continued...

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