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Gold nods to stronger Euro; Greece eyed
Gold rose in Europe on Wednesday, influenced by a stronger euro and firmer base metals as the market leant towards its commodity-specific properties, with investors waiting for further clarity on Greece and the wider euro zone economy.
The single currency gained traction against the dollar after China said it would continue investing in euro zone debt, although further gains looked dependent on whether Greek leaders signed a commitment to implement tough austerity measures.
Data released earlier showed the euro zone economy had shrunk by 0.3 in the last three months of 2011, with the sovereign debt crisis crushing a recovery, but a north-south divide was evident as France grew while Italy slumped.
Mitsubishi analyst Matthew Turner said the growth data was stronger than some had expected.
“This has raised hopes that if Q1 (2012) is also better than expected then perhaps there won’t be the deep recession everyone fears.”
Spot gold was quoted at $1,726.29 per ounce, up 0.4 percent on the day. Benchmark COMEX gold futures stood at $1,728.70, up $11.0.
More broadly, Turner noted that a scenario of Greece leaving the euro area was uncharted territory, while an improvement in the overall economic backdrop would need specific characteristics for gold to make further gains.
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