Gold edged higher but remained at a three month low after European stocks generally fell and the dollar paused after hitting an 11 year high.
On the New York Mercantile division spot gold gained 0.4% to sell at $1,171.70 after falling 2.6% on Friday- its biggest daily loss in more than 17 months- to settle at 1,163.45. This marked its lowest level since 1st December last year.
US gold for April delivery rallied $6.60 or 0.5% to trade at $1,170.80 an ounce snapping five straight sessions of losses but still retaining most of its 3% drop.
“What we saw on Friday, even though it was a big day for gold, the U.S. dollar and rates, it is still part of this gradual recovery in the U.S. economy that will continue to evolve throughout this year,” Warren Kreyzig, commodity analyst at Julius Baer told Reuters.
Data from the US Department of Labor showed a better than expected growth in monthly non-farm payrolls in February spurring the dollar to an 11 and a half year high and undercutting dollar prices.
The data sparked speculation that the US Federal Reserve would review the lending rate upwards sooner than expected spelling doom for non-interest paying assets like gold.
The latest surge in the prices of gold could be partly attributed to growing concern that a provisional agreement to continue aid to Greece would unravel; increasing demand for haven assets like gold.
“Renewed trouble for the euro zone means potentially much more weakness in the single currency, which would be bullish for gold as a safe-haven investment,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, told Bloomberg in a telephone interview.
“The fact that this is getting floated probably makes some people think they’re going to buy gold at the lows.”
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