Gold steadied on Thursday after a deal by European leaders to tackle the eurozone debt crisis and a positive reading on US growth encouraged investors to delve back into riskier assets and also to boost their bullion holdings. Euro zone leaders struck a deal with private banks and insurers for them to accept a loss on their Greek government bonds under a plan to lower Greece's debt burden and try to contain the two-year eurozone crisis.
Adding to the sense of confidence among investors, data showed the US economy expanded at its fastest pace in a year in the three months to September, which boosted high-yielding currencies, equities and industrial commodities. Spot gold was last down 0.2 percent at $1,716.50 an ounce at 1345 GMT.
"Commodities in general received a dose of good news over the last 12 to 24 hours from the EU summit. The market is taking it at face value and having a natural reaction to it, which will probably last another 12 to 24 hours before I imagine some questions start to be asked again," said Saxo Bank senior manager Ole Hansen. The price of palladium, used in catalytic converters, rose by more than 3.5 percent on the day, while crude oil rose by nearly 3 percent above $111 a barrel and copper rose by 5 percent, set for its biggest weekly gain in nearly 3 years.
"Gold has had a mixed relationship with risk recently - euro strength has generally been supportive since the September sell-off. But more recently we saw the correlation break down and gold trade as a safe-haven asset once again," said RBS commodities strategist Nikos Kavalis.
In the United States, a new congressional committee has until November 23 to make recommendations to the Senate and House of Representatives on how to reduce the budget deficit. So far this week, holdings of metal in exchange-traded funds, often viewed as one measure of investor demand for gold, have risen by more than half a million ounces, heading for their largest weekly inflow since the week of August 19 and total holdings are also at their highest since that date at 67.78 million ounces.
Gold ETFs have also pulled in more metal in October than at any time since July as holdings are up by over 700,000 ounces, even though bullion has behaved more like a risk-linked asset, moving in tandem with equities, than at any time in the last five months this week.
Physical demand for gold as well as silver remained robust in Asia, thanks to strong investment demand as well as seasonal buying during the ongoing festival and wedding season in India, the world's largest gold consumer. In other precious metals, silver eased by 0.1 percent to $33.35 an ounce, while platinum rose 0.4 percent to $1,595.75 an ounce. Palladium was last up by 3.7 percent at $665.22 an ounce, set for a 9-percent rise so far this week, its largest in almost a year.
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