Gold extends gains, equities drop on Europe debt fears

(Reuters) – Gold strengthened further on Monday as falling equities and lingering worries about a debt crisis in Europe drew investors to the precious metal, which posted its the biggest quarterly gain this year, but a firm U.S. dollar could still cap gains.

Stocks slipped in Asia and the euro fell on anxiety the euro zone’s debt crisis will dampen global growth after the Greek government said it will miss a deficit target set just months ago in a massive bailout package. [MKTS/GLOB[

Spot gold added $9.29 an ounce to $1,632.24 by 0308 GMT. Gold had posted a quarterly gain of 8 percent — its biggest this year, despite a drop of 11 percent for September, its largely monthly decline in three years.

“Gold rises despite a firmer U.S. dollar … perhaps gold’s appeal as a safe haven asset has been reinstated. Also, the market appears to be buying on the dip,” said Natalie Robertson, a commodities strategist at ANZ.

“Now there appears to be strong buying interest towards the $1,500 an ounce level.”

U.S. gold rose $11.7 to $1,634 an ounce.

Gold jumped to a lifetime high around $1,920 an ounce in early September after the euro fell against the dollar on growing doubts about Europe’s ability to solve its debt crisis.

European Central Bank member Christian Noyer said on Monday it is unrealistic to expect an increase in Europe’s bailout fund beyond what was agreed in July, but that he is open to schemes that would allow leveraging to expand capacity.

1 2

Tags: Gold analysis, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, Gold price forecast, gold prices, Silver price, silver prices