Gold firms on physical demand, euro zone debt woes

Gold edged back up above $1,390 an ounce in Europe on Monday as last week's price dip of more than 2 per cent brought physical buyers back to the market, with concern over the outlook for the euro zone also lending support. Spot gold was bid at $1,390.30 an ounce at 1001 GMT, against $1,383.15 late in New York on Friday. U.S. gold futures for December delivery rose $6.80 an ounce to $1,391.10.

The precious metal rose to a record high at $1,430.95 an ounce last Tuesday but quickly surrendered gains to end the week down 2.2 per cent. Its retreat has awoken fresh appetite from the metal among jewellers and physical investors, analysts said. Gold remains supported near $1,400 an ounce by ongoing concerns over the health of the euro zone. On the investment side of the gold market, holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, declined by a further 3.95 tonnes on Friday. The trust saw outflows of 8.2 tonnes of metal last week, or 0.6 percent of its total gold holdings, its biggest one-week outflow since early October. It is still the world's sixth largest holder of gold, ahead of Switzerland and Japan. Among other precious metals, silver was at $29.09 an ounce against $28.55, platinum was at $1,687.74 an ounce against $1,665.10, and palladium at $742 against $728.28.