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Gold Ends Higher On Weak Dollar; Gains 0.4% For Week

Gold futures snapped a three-day losing streak to settle higher Friday, as the dollar dropped with some positive data on consumer spending in the U.S. and eurozone finance ministers agreeing to increase the lending capacity of its firewall. The euro also made gains after Spain revealed its budget plans with massive spending cuts to steady the faltering economy.

Gold for June delivery, the most actively traded contract, gained $17 or 1.0 percent to close at $1,671.90 an ounce Friday on the Comex division of the New York Mercantile Exchange.

Gold traded at an intraday high of $1,672.70 an ounce and a low of $1,661.20 an ounce.

The precious metal gained 0.4 percent for the week, and 6.7% for the quarter.

Yesterday, gold ended lower for a third straight session amid a strong dollar and some soft U.S. gross domestic product data.

In a significant development, eurozone finance ministers agreed to raise the limits of its bailout funds to check any further spread of the debt crisis to member states. The euro made gains after the group decided to lift the current overall lending limit of the European Stability Mechanism and European Financial Stability Facility to euro 700 billion or $934 billion on Friday.

The euro also found further support after Spain revealed a euro 27 billion or $36 billion cut in its annual budget to enforce much-needed austerity measures. The major changes will see freeze in public sector salaries and a 16.9 percent reduction in departmental budgets.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 78.905 on Friday, down from 79.176 in North American trade late Thursday. The dollar scaled a high of 79.05 intraday, with a low of 78.73.

The euro was trading higher against the dollar at $1.3332 on Friday, as compared to $1.3249 late Thursday. The euro had scaled a high of $1.3375 intraday with a low of $1.3296.

In economic news, the U.S. Commerce Department said personal spending rose by 0.8 percent in February following an upwardly revised 0.4 percent increase in January. Economists expected spending to increase by 0.6 percent compared to the 0.2 percent growth that had been reported for the previous month.

Meanwhile, personal income edged up by 0.2 percent in February, matching the downwardly revised increase seen in the previous month. Personal income had been expected to increase by 0.4 percent.

In the eurozone, inflation slowed less than expected in March, flash estimate published by Eurostat showed. Annual inflation fell to 2.6 percent in March from 2.7 percent in February. Economists were expecting the rate to ease to 2.5 percent. Inflation continues to stay above the European Central Bank's 'below, but close to 2 percent' target.

Germany's retail trade turnover declined unexpectedly in February, data from the Federal Statistical Office showed. Retail sales fell 1.1 percent month-on-month in real terms in February, following a 1.2 percent drop in January. Economists expected 1.2 percent increase in sales for February.

by RTT Staff Writer

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