Gold rose on Thursday, holding firm against a stronger dollar for a second straight day, as escalating concerns over debt in some eurozone economies prompted investors to buy both the metal and greenback as safe havens. Gold benefited as doubts about Ireland's ability to repay its debts spread, and as the G20 meeting highlighted deep divides on currencies and trade imbalances among member countries.
Yields on 10-year Irish bonds rose well above 8 percent to a record high over comparable German debt. Investors worried the country wouldn't be able to cut spending as planned and may require a bailout. The news sent the euro to a five-week trough and the dollar sharply higher against a basket of currencies.
"Gold is resuming its role as a safe haven in times of crisis as the situations in Ireland and some European countries are getting worse. So, it has also been separating itself from the euro lately because of the safe-haven play," said Donald Selkin, chief market strategist at National Securities Corp.
Silver prices inched up and volume steadied after setting a new record earlier this week, with open interest showing a further decline on Wednesday when the US futures showed a 7 percent drop. Spot gold fell 0.2 percent to $1,404.80 at 1:57 pm EST (1857 GMT). Earlier in the session, it reached a high of $1,417.80 an ounce, closing in on the record $1,424.10 set earlier this week.
US gold futures for December delivery settled up $4 at $1,403.30 an ounce. Estimated COMEX gold volume at 2 pm was near 171,000 lots, about 5 percent lower than the 250-day average, preliminary Reuters data showed, and Wednesday's open interest eased 1.2 percent from a record high of 650,764 lots set in the previous session.
Among other precious metals, silver rose 0.9 percent to $27.42 an ounce. Holdings of the iShares Silver Trust, the world's largest silver exchange-traded fund, rose 3.4 percent to a record 10,718.82 tonnes by November 10, and now traders eagerly waited to see if holdings could drop sharply after the sharp liquidation. The ratio of gold to silver - the number of ounces of silver needed to buy an ounce of gold - slipped back toward the 2-1/2 year low near 50 it reached earlier this week. Platinum rose 0.4 percent to $1,742.49 an ounce, while palladium climbed 0.6 percent to $703.22.