Gold rose 1.5 percent on Thursday, fuelled by a dollar drop, commodities rally and uncertainty over the details of a deal struck by eurozone leaders to boost their bailout fund and slash Greece's debt. Bullion initially dropped as its renewed safe-haven appeal diminished after the leaders struck an agreement under which banks would accept 50 percent losses on their Greek debt holdings in a bid to cut Athens' debt to sustainable levels.
But analysts said gold benefited from uncertainty over the deal as economists questioned whether the increase in the European rescue fund and the write-down were big enough to contain the two-year-old debt crisis. Bullion has gained 8 percent during a five-day winning streak, and it appeared to regain its traditional safe-haven role after having moved in sync with riskier assets. Gold rose even as the S&P 500 US stock index rallied 3 percent.
"This is not a magic elixir. It's a very good start and certainly more than people had expected," Bill O'Neill, partner at commodity investment firm LOGIC Advisors, said of the eurozone deal. "Gold is up as there are still a lot of questions out there and pitfalls down the line," he said. Spot gold was up 1.4 percent at $1,744.09 an ounce by 12:28 pm EDT (1628 GMT). US gold futures for December delivery rose $22 to $1,745.50 an ounce. Silver gained 5.2 percent to $35.13 an ounce, on track for its largest one-day increase since mid-August.
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