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Spot Silver 32.40, Gold 1667.20, Rebounds On EU Lending Boost, Weak Dollar
Mar 30, 2012 By Matt Day Of DOW JONES NEWSWIRES

--Comex April gold up $12.50, or 0.8%, at $1,667.40 a troy ounce
--Increased EU crisis fund draws gold buyers after three days of declines
--Dollar-denominated gold also boosted as ICE US Dollar Index hits four-week low

NEW YORK (Dow Jones)--Gold futures gained on Friday as a pullback in the U.S. Dollar and Europe's latest financial commitment to try to prevent a worsening of its debt crisis drew buyers after three days of declines.

The most actively traded gold contract, for April delivery, recently rose $12.50, or 0.8%, to $1,667.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

Euro-zone finance ministers on Friday were poised to boost the region's crisis-fighting tools, increasing its emergency lending capacity to EUR700 billion. The news supported the view that European leaders were prepared to keep pumping money into the financial system in an effort to forestall a debt-fuelled credit crunch.

Gold tends to benefit from such an environment of easy money, as it can send investors into the metal as a hedge against the potential resulting weakness in currencies.

"Focus is firmly on the euro zone," Standard Bank analyst Marc Ground said in a note.

The dollar slumped on Friday, adding support to gold. A weaker dollar can make dollar-denominated gold futures appear cheaper for potential buyers using other currencies.

The ICE U.S. Dollar Index, which tracks the greenback against currencies of some major U.S. trading partners, on Friday touched its lowest level since March 1.

Gold's gains Friday also came as money managers adjusted their positions during the last trading day of the month and quarter.

"Money is coming into gold and (the) metals complex in anticipation of the next quarter asset allocations," said George Gero, a vice president and precious metals strategist with RBC Capital Markets, in a note.

Through Thursday's close, the benchmark gold contract was up 5% so far in 2012. Much of those gains came on demand for the metal as an alternative asset, fuelled by expectations that central banks in Europe and the U.S. will continue to deploy potentially currency-weakening accommodative monetary policies to support growth.

Gold pared those gains in March, however, falling by 3% through Thursday as investors bet that a surprisingly strong U.S. economy meant further Federal Reserve cash infusions weren't imminent.

-By Matt Day, Dow Jones Newswires; 212-416-4986; [e-mail]
(END) Dow Jones Newswires
03-30-12 0942ET

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