Gold prices rise as euro regains strength

Gold prices rose in Europe yesterday as the euro strengthened versus the dollar, but gains were capped by concerns that policymakers' efforts to address the Eurozone debt crisis are falling short and could keep European assets under pressure. Spot gold was up 0.8 per cent at $1,606.00 an ounce at 1012 GMT. While spot prices are still up more than 12 per cent this year, analysts say they will likely struggle for traction from here if the dollar starts strengthening again. The dollar's gains versus the euro on the back of the crisis have weighed on gold in recent months, putting the metal on track for its first quarterly loss in more than three years. "All the bull-run dynamics are still in place, but you have this trend of the strengthening dollar, positive data out of the United States as opposed to weak data out of Europe," said VM Group analyst Carl Firman. Article continues below "A strengthening greenback has traditionally seen gold in dollar terms decline, and that is what we're seeing. For a safe haven, you're looking at the dollar really. There's a lot of volatility in gold, in commodities, in other asset classes." The euro rose 0.4 per cent versus the dollar after yields at a Spanish treasury bill auction came in lower than expected, triggering stop-losses on some short positions in the single currency. Sentiment towards the unit remained fragile however, as concerns over the debt crisis lingered. Eurozone ministers agreed on Monday to boost IMF resources by €150 billion to ward off the debt crisis and won support for more money from EU allies, but it was unclear if the bloc would reach its €200 billion target after Britain bowed out. Gold prices are set to struggle to make up significant ground for the rest of the month, with traders wary of adding to long positions before year-end, analysts said.