Gold rose, capping a third straight weekly gain, as lower prices spurred some investors to buy the metal.
Gold declined 1.9 per cent in the two days after reaching a record $US1,254.50 an ounce on June 8. Holdings in the world's biggest bullion-backed exchange-traded fund rose to an all-time high. The euro fell as much as 0.7 per cent against the dollar after rallying the previous three sessions.
``Most people still want to hold gold as a risk hedge,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. ``Gold hasn't broken down in a big way like other assets because of the situation in Europe.''
Gold futures for delivery in August gained $US8, or 0.7 per cent, to $US1,230.20 on the Comex in New York. The metal gained 1 per cent this week.
Gold has outperformed stocks, bonds and other commodities this year as Europe has sunk into a sovereign-debt crisis. Gold has gained 12 per cent this year as the euro plunged 16 per cent.
The metal denominated in sterling, euros and Swiss francs has also risen to all-time highs this year.
`True bull market'
``We've seen gold reassert itself as an alternative currency,'' said Evy Hambro, the manager of Blackrock Investment Management Ltd.'s World Mining Fund. ``You only really get a true bull market for gold when gold is rising in all currencies, and that's exactly what we're seeing.''
Holdings in the SPDR Gold Trust, the biggest ETF backed by bullion, rose 7.61 metric tons to a record 1,306.14 tons yesterday, according to the company's website. The fund's assets are up 15 per cent this year.
``Gold continues to perform well, reflecting the uncertainties with respect to future global monetary conditions,'' analysts at Deutsche Bank AG said today in a report.
Still, prices may be too high to attract new buyers, some analysts said.
``Gold is likely to encounter repeated resistance at the $US1,250 mark over the coming month,'' David Thurtell and other Citigroup Inc. analysts said today in a report. ``The seasonal low period for buying in India is upon us, which will take some of the heat out of the market.''
Silver may outperform gold prices in the ``medium term'' on increasing industrial demand, and may reach $US20 in the next six to 12 months, according to Citigroup.
Silver futures for July delivery fell 12 cents, or 0.7 per cent, to $US18.231 an ounce on the Comex, capping a 5.4 per cent gain for the week.
Platinum futures for July delivery fell $US1.20, or 0.1 per cent, to $US1,535 an ounce. The metal fell 0.6 per cent this week. Palladium futures for September delivery lost 75 cents, or 0.2 per cent, to $US448.55 an ounce. The metal gained 4.1 per cent this week.
