The price of gold was moving higher Wednesday morning as the euro spiked after reports quoted European Central Bank council member Ewald Nowotny as saying that there are arguments in favor of giving Europe's rescue fund a banking license.
Gold for August delivery, the most actively traded contract, added $15.60 to $1,591.80 an ounce. Yesterday, gold ended lower on continued investor concerns over the euro zone sovereign debt crisis and a strong dollar. The U.S. dollar continued to make significant gains while the euro struggled after data from the euro zone showed contraction in private sector activity.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,254.64 tons.
Meanwhile, the U.S. dollar was leveling off from its 2-year high versus the euro, while moving up near a two-week high against sterling. The buck was lingering near a two-month low versus the yen and trading flat against the Swiss franc.
In economic news, Germany's business confidence declined more than expected in July, reports said citing the latest survey results from Ifo Institute. The Ifo business climate index fell to 103.3 in July from a revised 105.2 in June. Economists expected the index to fall to 104.5.
Meanwhile, the U.K. economy contracted at a faster than expected pace in the second quarter, the preliminary estimate from the Office for National Statistics showed The gross domestic product was down 0.7 percent sequentially, marking the biggest fall since the first quarter of 2009. The decline follows a 0.3 percent fall in the first quarter and 0.4 percent decrease in the fourth quarter of 2011. Economists expected a decline of 0.2 percent.
The prices of silver and platinum were moving higher in morning deals.
From the U.S., the Commerce Department will release its new home sales report for June at 10 a.m. ET. The consensus estimate calls for new homes sales of 370,000 after sales rose 7.6 percent to 369,000 in May.
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