The price of gold was extending gains Wednesday morning amid weak U.S. dollar, with traders focus turning to developments in the euro zone as the rating agency Moody's Investors Service left its Spanish sovereign rating unchanged at investment grade, but with a 'negative' outlook.
Meanwhile, reports showed the Spanish government is inching closer to officially request a European bailout.
Gold for December delivery, the most actively traded contract, added $5.50 to $1,751.80 an ounce. Yesterday, gold snapped its two-session losing streak to end higher as the dollar dropped against a basket of major currencies while the euro jumped on news that Spain may request for aid from the European Union's bailout fund. Investors also weighed some upbeat data out of Europe, while awaiting the outcome of the European heads of state summit this week, where a decision on Greece is expected.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,333.89 tons.
Meanwhile, the U.S. dollar continued to level off from its two-week high versus the euro and from a monthly high against sterling. The buck was ticking lower versus the yen and the Swiss franc.
In economic news, unemployment rate in the U.K. declined unexpectedly between June and August, the latest figures from the Office for National Statistics revealed. The jobless rate fell to 7.9 percent in the June-August period from 8.1 percent during March-May. Economists expected the rate to remain unchanged from the previous period.
Bank of England policymakers unanimously decided to maintain quantitative easing at GBP 375 billion and the interest rate unchanged at 0.50 percent, the minutes of the meeting showed today.
The prices of silver and platinum were moving higher in morning deals.
From the U.S., the Commerce Department will release its report on housing starts and building permits at 8.30 a.m. ET. Economists expect housing starts to edge up to 770,000 in September from the previous 750,000 and building permits to gain to 810,000 from 803,000.
