Yellow metal continues retreat

Gold prices eased in Europe yesterday, extending the previous session's retreat from record highs, as fresh strength in equity markets and gains in the euro versus the safe-haven Swiss franc pointed to sharper appetite for risk. Spot gold was down 0.7 per cent at $1,752.31 (Dh6,430.97) an ounce at 1106GMT, but is still on track for its best weekly performance in 2-1/2 years. The precious metal has risen 24 per cent so far this year on a potent mix of concerns over US and Eurozone debt and growth. The precious metal hit a record $1,813.79 an ounce on Thursday but slipped as investors liquidated longs after the CME Group said it was raising margins on Comex gold futures. "Yesterday's correction was merely a response to a hike in margin on Comex gold futures contracts by 22 per cent," said Pradeep Unni, senior analyst at Richcomm Global Services. "The trend still is completely biased to the upside with further gains possible as we continue to get bad news from the economic front. The focus however has shifted to the Eurozone." Article continues below The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, reported its biggest one-day outflow since January 25 on Thursday, with its holdings declining by 23.6 tonnes, worth some $1.3 billion at current prices. "Some ETF investors clearly view the recent gold's sharp price rally as exaggerated and have taken profits," said Commerzbank in a note.