Gold prices struggled to hold recent gains Friday as a successful Italian bond auction buoyed optimism about the direction of the Eurozone's economy and dampened the safe-haven appeal of the yellow metal.
Ultra-cheap money from the European Central Bank has boosted the amount of cash Eurozone banks hold, and they did not hesitate Thursday to spend it on bonds from Spain and Italy that carry much higher interest rates than the money borrowed from the ECB.
Yields on Spanish and Italian bonds fell Thursday, and on Friday the yield on Italy's three-year bonds fell to its lowest level since last September.
The bond auction results stirred a global appetite for risk.
"Overseas equity markets fared quite well because of the sovereign-bond sales in Italy and Spain that saw related bond yields coming down. That helped to ease the fears about the euro debt crisis," Ben Kwong, chief operating officer at KGI Asia in Hong Kong, the Wall Street Journal.
