NEW YORK (Reuters) - Gold rose on Thursday despite a resurgent dollar, as flight-to-quality buying boosted the precious metal due to sovereign debt worries surrounding Greece and uncertainty about currencies.
Bullion’s gains in the face of a stronger dollar indicate the inverse relationship between the metal and the U.S. currency is broken for now and could weaken further, traders said.
“Gold did end higher today despite the weak euro/dollar, and that is a very bullish indicator. With worries about sovereign debt, there is still a safe haven to the gold,” said Mihir Dange, a COMEX gold floor trader in New York.
Gold’s ability to hold above $1,118 an ounce for a second straight day also signaled strong buying interest, Dange said.
Economic optimism also provided support to gold as an inflation hedge, with the Dow Jones industrial average is on track to post an eight-session winning streak.
Spot gold was at $1,127 an ounce at 2:43 p.m. EDT (1843 GMT), up from $1,124.05 late in New York on Wednesday.
U.S. gold futures for April delivery on the COMEX division of the NYMEX settled up $3.30 at $1,127.50.
The session featured mixed trading as the falling euro prompted selling but the search for a safe haven sparked buying, analysts said.
“If Greece is becoming a concern again, people should be going to gold (as a haven), but the euro should be falling, which should be bad for gold,” said Citigroup analyst David Thurtell.
Recurring fears over debt-laden Greece and the global credit outlook knocked the euro nearly 1 percent lower versus the dollar. <FRX/>
A report earlier said Greece was not hopeful of receiving assistance from other euro zone countries and may seek aid from the International Monetary Fund in April.
Greek Finance Minster George Papaconstantinou had denied that Athens may soon turn to the IMF god aid, saying all options for getting support are still open.
Among other commodities, oil slid toward $82 a barrel on Thursday, surrendering much of the previous day’s gains, on a dollar rise. <O/R>
Physical demand for gold in the world’s biggest bullion consumer, India, was slack on Thursday as dealers awaited further price falls to buy.
In the United States meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust -- often called GLD, its ticker symbol -- were also steady for a fifth straight session on Wednesday. <GOL/SPDR>
Analysts say the fact the GLD has seen outflows of more than 18 tonnes so far this year, compared with inflows of 289 tonnes in the same period of 2009, could be cause for concern.
Among other precious metals, silver was at $17.40 an ounce versus $17.46, platinum was at $1,623 an ounce versus $1,629, and palladium at $475.50 versus $476.
Reporting by Frank Tang and Jan Harvey; Editing by David Gregorio