Gold gains despite strong dollar

Gold remained on the positive territory as fresh concerns over Europe financial crisis boosted its safe haven appeal despite a strong dollar. Gold for immediate delivery was seen trading at $1840.25 an ounce at 1.00pm Singapore time while US gold for December delivery was seen trading at $1,844.04 an ounce on the comex division of Nymex. Analysts said the precious yellow metal likely to extend gains during the day as investors start brisk buying gold on fears of crisis contagion in Europe despite technical weakness and a strong dollar. They said investors have been buying gold for weeks out of fear that Greece could default on its debt, an event that would be sure to cause disruptions in financial markets. Analysts however said gold may dropped towards the weekend as short-term weakness and market sentiment are likely to ease by that time. Meanwhile, the dollar strengthened Wednesday as it edged higher against a basket of currencies on course for a tenth day of gains since Aug. 30. Holdings of the world''s largest gold-backed exchange-tradedfund, SPDR Gold Trust , edged lower to 1,241.311 tonnes by Sept. 13 from a 2-1/2-week high of 1,241.917 tonnes on September 9. On Tuesday, news that China could increase purchases of Italian debt failed to convince markets. China has an estimated $3.2 trillion in foreign exchange reserves. At current exchange rates Italy''s gross government debt for will amount to four-fifths of that by the end of 2011. Italy''s Treasury cancelled its August auction of medium-to-long term bonds, announcing that it would instead offer 12-month Treasury bills.