Gold rose to three-month highs in Europe on Friday as concern over the fiscal outlook for peripheral euro zone economies boosted safe haven flows into the precious metal, with a rebound in the euro also lifting prices.
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, rose nearly 10 tons to a record 1,140.433 tons on Thursday, its biggest one-day rise since September.
Spot gold peaked at $1,157.25 and was bid at $1,155.65 an ounce at 0927 GMT, against $1,150.15 late in New York on Thursday.
"The market is overall little bit disappointed with all the problems with Greece," said Afshin Nabavi, head of trading at MKS Finance in Geneva. "A lot of people are turning to commodities as a safe haven.
"We've got a lot of potential still to come in gold," he added. With the metal's break of resistance at $1,155 an ounce, he said, "the path to $1,200 will be open."
U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $3.80 to $1,156.70 an ounce.
Spot gold prices peaked at $1,226.10 an ounce in December amid talk of fresh interest in the metal from central banks. It has since been buoyed by persistent concerns over the fiscal health of debt-laden Greece and other smaller euro zone economies such as Portugal, Italy and Ireland.
This has helped the metal shrug off overall strength in the dollar, which has risen more than 6 percent versus the euro so far this year. Strength in the U.S. currency usually weighs on gold, which is often bought as an alternative asset.
A recovery in the euro on Friday on speculation Greece may receive help to deal with its public debt load is helping gold push higher still, though simmering concerns over the country are still keeping some pressure on the single currency.
"The 10-year Greek bond yield was on the rise at new highs around 7.5 percent, along with ever-rising sovereign credit default swaps on the debt-burdened euro zone member," said VTB Capital analyst Andrey Kryuchenkov in a note.
"Persistent jitters and talk of a potential Greek default are likely to offer support to gold prices in the short term as investors seek protection from sovereign and currency risks."
Among other commodities, oil rebounded toward $86 on Friday after two days of declines, as positive U.S. economic indicators and views that China may revalue its currency bolstered expectations for sustained energy demand growth.
On the physical side of the gold market, dealers said Indian demand was recovering after a few slack sessions as a strong rupee made the dollar-priced metal cheaper.
While ETF inflows jumped in the United States, holdings of the Julius Baer Gold Fund also rose 2.4 percent on Thursday to 2.254 tons, the fund estimated.
Other precious metals also climbed, with silver rising in gold's wake to near 11-week highs at $18.25 an ounce. Silver was later bid at $ an ounce against $18.04.
Elsewhere platinum was at $1,715 an ounce versus $1,711.50, while palladium was at $505.50 versus $501.50.
Both metals are benefiting from expectations that demand from carmakers, which account for more than half of annual consumption of platinum and palladium, will rise as the economic recovery picks up.
"On the charts the recent gains in platinum have pushed the metal into overbought territory," said James Moore, an analyst at TheBullionDesk.com.
"However with room above in palladium, ETF holdings increasing and the overall tone in the precious complex upbeat, we expect dips to remain limited with both set to target higher levels around $1,750/$525 in the coming sessions."
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