Gold price rises after tumbling early

Gold rose on Friday, reversing sharp initial losses as uncertainty over an upcoming rescue plan for Spain's troubled banks encouraged some safe-haven buying and prompted investors to cover their bearish bets ahead of the weekend. The metal rebounded $30 from its early lows after sources told Reuters Spain is expected to request European aid for its ailing banks at the weekend to forestall worsening market turmoil. Friday marked the third consecutive session gold has moved in a $30 range, or wider. "There is a tremendous amount of fear going into the weekend as to what's going to happen with the bailout on Spanish banks. That is driving people into a safe haven, which gold represents," said Jeffrey Sica, chief investment officer at SICA Wealth Management LLC, which has $1 billion in assets. "Gold is trading so volatile that smaller moves could be very much exaggerated just based on momentum. We could see it plunge or surge at any given moment," Sica said. The metal's turnaround was particularly impressive in the face of losses in industrial commodities led by copper and a higher dollar. The inverse correlation between gold and the U.S. dollar fell to its weakest in about six months. Bullion still ended lower for the week, with investors frustrated after Federal Reserve Chairman Ben Bernanke at a Congressional testimony Thursday failed to hint at a hoped-for renewal of monetary stimulus. The metal staged a 4.3 percent rally last Friday on expectations for further easing after last Friday's dismal U.S. jobs report. Spot gold was up 0.2 per cent at $1,592.44 an ounce, rebounding sharply from a one-week low of $1,561.44 earlier in the session. US gold futures for August delivery settled up $3.40 at $1,591.40 an ounce, with trading volume at about 30 percent below its 30-day average, preliminary Reuters data showed. The metal lost 2 per cent for the week for its biggest one-week loss in four weeks. From a long-term chart perspective, gold still held its three-year upward trendline. However, the metal could face technical resistance between $1,620 and $1,650 an ounce after a sharp pullback late in the week, said Mark Arbeter, chief technical strategist of S&P Capital IQ. Gold was one of the few commodities on Friday that defied a sharp rise in the dollar index after Spain's credit was lowered by Fitch ratings. The 25-day correlation-log between bullion and the dollar was at -0.24, the weakest negative correlation since October 2011. Traders said that a record low in US Treasury bond yields earlier last week prompted some investors to favor higher-yield blue-chip equities at the expense of gold. US equities measured by the S&P 500 index posted a near 4 percent weekly rise for its biggest gain of the year. Among other precious metals, spot silver fell about 0.1 per cent to $28.55 an ounce. Spot platinum eased 0.3 per cent to $1,429.74 an ounce, and spot palladium dropped 1.3 per cent to $610.25 an ounce. From gulfnews