Gold firmed on Thursday, within sight of its highest in nearly three weeks hit the previous session, as worries about euro zone's fiscal crisis lingered despite hopes the European Central Bank and the United States would step in to help. Gold firms near highs, euro debt worries persist
The European Central Bank is under pressure to unveil new steps to stabilise the euro zone when it meets on Thursday as the currency bloc battles a crippling debt crisis that has stoked contagion fears in the United States and Asia.
Spot gold added USD 4.57 to USD 1,391.92 an ounce by 0312 GMT after rising as high as USD 1,396.70 on Wednesday its strongest since November 12. Bullion was still below a lifetime high around USD 1,424 struck in early November.
Bullion got a bit of a boost from news that China's gold imports jumped six-fold in January to October to more than 200 tonnes, although dealers said Thursday's gains were mostly driven by investment demand.
"I don't think you can solve this problem a short period of time. I think we are still worried about the situation in Europe," said Dick Poon, manager at Heraeus in Hong Kong.
"Recently, we only see physical demand on the investment side. Other than that, manufacturers are quite slow. This is related to the high price. They take sometime off," said Poon, referring to jewellery makers.
US gold futures for February rose USD 5 an ounce to at USD 1,393.3 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings rose to 1,293.891 tonnes by December 1 from 1,286.603 tonnes on November 29. The holdings hit a record at 1,320.436 tonnes on June 29.
A bullish target at USD 1,403 per ounce for spot gold is unchanged, as the current rise may extend its gain to the 100% Fibonacci projection level, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals.
"I think a recovery in Europe will be very slow. Even though Portugal said that it has no problem, people don't believe that," said dealer in Hong Kong.
"The worry is psychological. The European Union has to step in and give them the money," he added.
Even after Ireland's bailout, investors have been losing confidence that Portugal and Spain can escape a similar fate, leading to expectations the ECB will announce backstop measures to keep cash flowing in its financial system, though it may disappoint investors by not being ready to increase bond purchases just yet.
A U.S. official told Reuters that Washington would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund.
Silver tracked gold higher, while platinum group metals also firmed.
The world's largest silver-backed exchange-traded fund, iShares Silver Trust, said its holdings rose to 10,782.69 tonnes by December 1 from 10,711.23 tonnes by November 26.
The holdings jumped to an all-time high of 10,893.68 tonnes on November 23.
The euro held on to overnight gains early in Asia on Thursday, having posted its biggest one-day rise in six weeks in a dramatic turnaround as the market cut short positions ahead of the European Central Bank policy meeting. Japan's Nikkei share average rose 2% to a fresh five-month high on Thursday, after Wall Street gained the most in three months on talk of steps to resolve the EU's debt crisis.