Gold Steadies; US Dollar Retreats From Highs

CNBC

Gold steadied on Friday as the U.S. dollar retreated from highs, while jitters about whether Greece was edging closer to default and fears of economic spillover from the country's debt crisis could spur safe haven buying from investors.

Greek Prime Minister George Papandreou fought to form a cabinet to avoid defaulting on the national debt and postponed announcing the cabinet until Friday, in a sign of how difficult his task is.

Spot gold was hardly changed, standing at $1,528.26 an ounce, and is heading for its second weekly drop this month if it fails to rally by a couple of dollars on the debt crisis in Europe.

"In the last 48 hours, it's just floundering, trying to work out what it wants to do. If anything, the strength of the dollar and the political fears are just getting the bulls and bears at loggerheads," said Jonathan Barratt, managing director of Commodity Broking Services.

"I think it's been well supported by the political concerns, obviously Greece and inflationary issues that we've seen over the week. The strength of the dollar is the one that seems to really trying to push it."

Gold is well below a lifetime high around $1,575 touched in early May. Recent gains were driven by debt problems in Europe and inflation fears in China following strong economic data and worries about a U.S. economic slowdown.

The dollar index slipped to 75.419 from a three-week high of 76.015 after the European Union's top economic official, Olli Rehn, said he expected the EU and the IMF to release a crucial 12 billion euro loan tranche in early July to keep Athens afloat.

Any solution to Greece's debt woes must avoid the coercion of bondholders or a default, European Central Bank President Jean-Claude Trichet was quoted as saying on Friday.

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