Fears that some nations may resist EU plan raises gold's appeal as store of value
Gold futures rose for the second time in three days as the dollar’s decline boosted demand for the precious metal as an alternative asset.
Leaders of the 17 euro nations reached an accord to tighten budget controls and added €200bn ($267bn) to a rescue. The euro gained against the dollar, which fell against a basket of major currencies.
“The weaker dollar is working to push gold higher,” Sterling Smith, an analyst at Country Hedging in St. Paul, Minnesota, said in a telephone interview.
Gold futures for February delivery rose 0.2 percent to settle at $1,716.80 an ounce at 1:55 pm on the Comex in New York, paring this week’s decline to 2 percent. The metal has climbed 21 percent in 2011, heading for an 11th straight annual gain, on demand for a haven amid escalating debt in Europe and the US.
Speculation that the European plan may meet resistance from some nations increased gold’s appeal as a store of value, Smith said.
UK Prime Minister David Cameron said there was “fundamental disagreement” in European Union talks in Brussels and rejected signing a fiscal pact. Finland threatened to withdraw from the permanent bailout fund if decisions shift to a “qualified majority” from unanimity.
“A lot of questions remain with the European situation, and it’s not clear how people in these countries will react to the agreement when leaders take it home,” Smith said.
Silver futures for March delivery rose 2.3 percent to $32.253 an ounce on the Comex, snapping a two-day slump. The metal fell 1.3 percent this week.