Gold rose on Wednesday, after the Greek parliament approved debt austerity measures that boosted the euro against the dollar and fuelled investor appetite for commodities and other riskier assets. Bullion's second straight day of gains partially offset recent weakness from risk aversion and technical selling. The metal is still down 3 percent in the last five sessions, as fears that debt-laden Greece may yet default dented gold's appeal as an inflation hedge.
Spot gold was last up 0.7 percent at $1,510.30 an ounce by 12:19 pm EDT (1619 GMT), countering losses seen earlier in the week that took the price below $1,500. US August gold futures rose $11.1 to $1,511.30. Gold was largely lifted as part of the risk-on trade-buying equities and commodities in light of dollar weakness. "The dollar is weak today. In that environment, you do see gold and silver go up when you get that kind of dollar weakness," said James Dailey, a portfolio manager with TEAM Asset Strategy Fund with $200 million of fund assets.
Silver was up 2.6 percent at $34.75 an ounce. The euro rose 0.5 percent against the dollar, after Greece's parliament approved deeply unpopular austerity measures. HSBC said, in a note, that the Greek debt crisis has prompted some flight-to-quality flows, directed towards perceived safe-haven assets like the Swiss franc and US Treasuries, rather than gold.
Inflows into exchange-traded funds backed by physical gold indicated investors have been buying gold, pushing up global ETF holdings of bullion by nearly half a million ounces in the last two weeks, according to Reuters data. So far this year, ETF holdings of gold are down by about 0.2 percent or 185,000 ounces, in contrast to last year, when the burgeoning eurozone debt crisis fed strong demand for gold ETFs.
The United States would immediately have its top-notch credit rating slashed to "selective default," if it misses a debt payment on Aug. 4, Standard & Poor's managing director John Chambers told Reuters. Platinum group metals rose for a second day, following strength in global equities, lifted by optimism over a positive outcome for Greece in avoiding default.
Concerns over power supply in South Africa, the world's top producer of platinum, also helped support prices, which fell to three-month lows earlier in the week. Spot platinum was last up 1.9 percent at $1,720.50 an ounce, and palladium rose 1.4 percent to $746.47.