Gold rises in Europe

Gold prices firmed on Thursday in line with stocks and other commodities, further retracing the previous day's sharp fall, as renewed optimism that a deal will be reached to resolve the US fiscal crisis boosted appetite for assets seen as higher risk.
World shares hit three-week highs and commodities rose after House of Representatives Speaker John Boehner voiced optimism that Republicans could broker a deal with the White House to avoid a $600 billion crunch of spending cuts and tax hikes dubbed the "fiscal cliff".
The implications of the fiscal cliff for gold are unclear. Protracted talks, which could heighten risk aversion, may be positive if they spark buying of the metal as a haven from risk, but in the short term, hopes for a quick resolution are benefiting gold as it keeps pace with stocks. "It could be positive for gold whichever way the negotiations go, but a rally on a speedy resolution might be quite a short-term positive, whereas any risk of prolonged sovereign stress could be a longer-lasting positive," the Economist Intelligence Unit's Caroline Bain told the Reuters Global Gold Forum on Thursday.
"We think (a quick resolution) is more likely," she said. "Obama has a clear mandate, and there are signs that the Republicans will be less obstructive, at least initially. The Democrats need to seize the moment of relative weakness to hurry through a deal." Spot gold was up 0.3 percent at $1,724.50 an ounce at 1402 GMT, after tumbling 1.3 percent in the previous session due to a heavy bout of stop-loss selling. US gold was up$8.10 an ounce to $1,724.60.
UBS said in a daily market note that despite the selling on Wednesday, it had observed little client appetite to follow the trend, suggesting that gold remained well supported. Gold prices found good support at $1,720 an ounce, a key retracement of the decline from its October high of $1,795.69 an ounce to its November low at $1,672.24, and the location of its 30-day moving average.
"Gold broke below the ascending channel which had been developing since early November (at) 1737/35," Societe Generale said in a note. "(Key support level) $1,703 is the 61.8 percent retracement of the recovery from 1672 to 1754, as well as the lows of early/mid-November."
Dealers said cheaper gold prices after the technically driven sell-off on Wednesday augured well for increased buying of physical metal. Gold importers in India, the world's biggest buyer of the metal, sprang back in action, accumulating stocks in small quantities, as prices fell to hit their lowest in nearly two weeks.
Holdings of the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, hit a record high for a second consecutive day, underlying buoyant investment interest. Its holdings stood at 1,347.018 tonnes on November 28, up nearly 11 tonnes so far this month and on course for its fourth month of straight gains.
Spot silver was up 0.5 percent at $33.91, while the gold-silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, stood at 51.1, hovering above a two-month low. Spot platinum was up 0.7 percent to $1,617, and palladium was up 1.5 percent at $681.