Gold prices on the up

UP: The price of gold edged higher after reaching it's lowest point since November 2 the day before.

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Gold prices turned higher in Europe, rising back above $1,070 an ounce, as the dollar's retreat versus the euro boosted the metal's appeal as an alternative asset.

Spot gold was at $1,072.40 an ounce at 1608 GMT versus $1,065.55 late in New York on Friday, having earlier touched a high of $1,073.50.

In the last session it slid to $1,043.75, its lowest since November 2, as the euro fell on fears over the outlook for some euro zone economies. The single currency's recovery on Monday helped gold to rise, though analysts are still cautious.

"We are probably not out of the woods yet," said Saxo Bank senior manager Ole Hansen. "We are not ready to de-couple from the dollar, so we continue to keep an eye on that."

U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $18.50 to $1,070.70 an ounce.

A two-day meeting of the Group of Seven ministers and central bank governors in northern Canada this weekend was capped by reassurances about debt-strapped Greece and agreement that banks should pay for future rescue funds.

But dealers said investors were disappointed the meeting did not result in concrete action to tackle sovereign debt issues in countries such as Greece, Portugal and Spain.

Concern over the outlook for smaller euro zone economies was a major driver of the sharp rise in risk aversion late last week, which saw hefty selling of the euro and assets perceived as higher risk, such as equities and commodities.

Gold's price drop prompted some fresh interest in the metal, however, with the world's biggest gold-backed exchange-traded fund, New York's SPDR Gold Trust, reporting its first inflow since December on Friday.

"There has been a bit of bargain hunting," said Credit Agricole analyst Robin Bhar. "We fell to nearly $1,040 on Friday, so that has seen a bit of trade interest and investor positioning emerging, which has given a boost to the market."

From a technical perspective, resistance near the $1,050 level held on Friday, preventing a move down toward the 200-day moving average near $1,020 an ounce. A breach of this area would lead to a sharper sell-off, analysts said.

"Copper, WTI (U.S. crude futures) and gold have all come down to look at the 200-day moving average, which is quite an influential level," said Bhar.

"The 200-day and 100-day moving averages are often targeted by longer-term players -- funds, hedge funds -- as an indicator of whether to buy or sell, so that could be influential going forward," he added.

Among other precious metals, silver was at $15.16 an ounce from $15.11 an ounce, platinum at $1,477.50 from $1,479.50 and palladium at $401.50 from $402.50.

While all precious metals are to an extent tied to the dollar, platinum group metals' greater exposure to the economic cycle means they could be better supported than gold.

"With the complex largely held hostage to EUR-USD movements, the near-term outlook looks shaky," said Morgan Stanley in note. "We do expect, however, platinum and palladium to continue to outperform."

- Reuters