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With the start of this busy session, gold gained some momentum and extended the gains recorded in the previous session, where investors are demanding more gold as a hedge against uncertainty ahead of the major events awaited today. Yesterday, gold advanced and extended the gains recorded this week, where the metal was able to hold onto the gains despite the strengthening U.S. dollar, which forced downside pressures on other metals, commodities and currencies. Gold futures rose for a third consecutive day on Thursday, nearing a one-month high as the euro's sharp rise after a pair of successful euro-zone debt auctions and low interest rates in the currency union drew buyers to precious metals.
The most actively traded gold contract, for February delivery, recently rose $19, or 1.2%, to $1,658.60 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract climbed as high as $1,660.90 a troy ounce, the highest intraday price since Dec. 13.
Debt auctions in Italy and Spain on Thursday were considered to be successful, easing worries about the financial stability of two of the currency union's more debt-laden members. The euro rose against the dollar in response, lifting demand for precious metals as alternative assets.
A falling dollar can increase interest in dollar-denominated gold futures by making them appear cheaper for buyers using other currencies. Some investors buy gold to shield their wealth against weakness in the currency.
Gold was also fueled by the view that low interest rates in Europe and the U.S. are here to stay. The European Central Bank Thursday said it would leave its benchmark rate unchanged, but in a press conference, ECB chief Mario Draghi kept the door open to future cuts. Uncertainty, he said, remains high and "we stand ready to act."
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