"The link is of course the U.S. dollar, with the situation
in Greece easing, and with the U.S. economic outlook improving."
Concern over the fiscal health of debt-laden Greece and
other peripheral euro zone economies weighed heavily on the euro
last week, pushing the single currency to 9-1/2 month lows
versus the dollar. However, those fears are now receding.
French President Nicolas Sarkozy promised on Sunday that
euro zone countries would help Greece if its financial problems
worsened. [ID:nPAB008209]
Currency speculators cut by more than half their long bets
on the U.S. dollar in the latest week, according to Commodity
Futures Trading Commission data released on Friday
In a note, ScotiaMocatta said last week's higher close for
gold prices had left the metal well-placed for further gains.
"The close is constructive considering we are above the highs of
the past two weeks of $1,127 and $1,131," it said.
"Our initial topside target is the 2010 high of $1,161."
OIL RISES
Other commodities also benefited from the same sentiment,
with crude prices rallying to eight-week highs above $82 a
barrel on the weaker dollar and signs of an economic recovery in
top oil consumer the United States. [O/R]
Investment demand for gold firmed meanwhile, with holdings
of the world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, rising 0.609 tonnes on Friday. [GOL/SPDR]
However, jewellers in Asia sold back some of their holdings
on Monday to take advantage of firm bullion prices, while gold
bars were offered at a discount for the first time in two months
in Tokyo as selling persisted. [GOL/AS]
Palladium <XPD=> rose as high as $477 an ounce, close to the
two-year high of $480 an ounce it hit late last week, and was
later at $475.50 against $471.
Robust auto sales figures in the major gasoline car markets
China and the United States lifted prices last week. While
diesel autocatalysts use a heavier loading of platinum than
palladium, petrol catalysts are more palladium-intensive.
"It is the relatively better demand for gasoline fuelled
autos and background concerns over Russian stock levels that is
supporting the palladium rally," said HSBC analyst James Steel
in a note.
Among other precious metals, platinum <XPT=> tracked
palladium higher to a 6-1/2 week high of $1,603 an ounce. It was
later at $1,599 an ounce against $1,569.50, while silver <XAG=>
was bid at $17.39 an ounce against $17.32.
(Reporting by Jan Harvey; Editing by William Hardy)