Gold rose on Friday, resuming its month-long rally as a stronger-than-expected US payrolls report failed to quell fears of a double-dip recession and expectations of monetary easing by central banks. Bullion is poised to end the week up nearly 4 percent, its fifth straight weekly gain, a day after investors scrambled to meet margin calls elsewhere as Wall Street dived.
Major global indexes extended losses on Friday on mounting fears about a stalled US economy and a widening European debt crisis. Investors piled into gold on worries about government currency and bond market interventions as well as a likely renewal of monetary easing by central banks around the world.
"Gold is reacting to a gloomy economic outlook and the expected responses by governments, as it is very plausible to expect that governments will keep printing paper money," said James Dailey, portfolio manager of TEAM Financial Asset Management, which oversees $200 million in assets.
Bullion gained after sources close to the matter told Reuters the European Central Bank is ready to buy Italian and Spanish bonds if key structural reforms are brought forward. Spot gold was up 0.6 percent at $1,658.59 an ounce by 12:25 pm EDT (1625 GMT), after it hit a record high of $1,681.67 on Thursday before sharply reversing to end lower. US December gold futures were up $2.20 at $1,661 an ounce. Independent investor Dennis Gartman, however, said a bearish technical reversal and market preference for cash over riskier assets had prompted him to cut his gold positions by half.
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