Gold gains on growing Eurozone optimism

Gold prices rose more than half a per cent yesterday as growing optimism that European leaders will sign off on a rescue deal for Greece lifted the euro, and after China's central bank further loosened monetary policy. Spot gold was up 0.4 per cent at $1,730.80 (Dh6,355.50) an ounce at 1019 GMT, while US gold futures for February delivery were up $6.70 an ounce at $1,732.60. Gold prices are up 10.8 per cent so far this year, benefiting from a rebound in the euro and expectations that US monetary policy will remain loose, cutting the opportunity cost of holding non-yielding bullion. But analysts say the appeal of other investments could keep gold prices range-bound this year. "The risks [in Europe] could dissipate modestly in the near term. Certainly, in China, there is a growing acceptance that the government will step in to support growth, and things look like they're stronger than expected in the United States," said Deutsche Bank analyst Daniel Brebner. "Globally, it looks like risk assets are being accumulated by investors, and in that kind of environment, gold should perform reasonably well," he added. "But I would argue it could underperform some of the other metals, the base metals and the white precious metals." The euro rose 0.4 per cent Monday after China eased monetary policy to stimulate growth and expectations mounted that Eurozone policymakers were set to approve Greece's long-awaited second bailout, averting a messy default.