 "Dollar can't defy gravity, gold is getting its shine back")
Singapore: Spot gold rallied 1 percent on Tuesday, snapping four consecutive sessions of losses as a weaker dollar helped battered commodities stage a comeback.
Euro-zone officials are working to magnify the firepower of the region’s rescue fund, European Central Bank policymakers said on Monday, boosting hopes the region will be able to staunch a sovereign debt crisis that threatens the world economy.
The news pushed the dollar down 0.6 percent against a basket of currencies, making gold cheaper for holders of other currencies. Spot gold gained 1 percent to $1,644.40 an ounce by 0330 GMT, after sinking as much as 7 percent to a 7-1/2-month low near $1,530 in the widest daily swing on record on Monday.
[caption id=“attachment_93524” align=“alignleft” width=“380” caption=“Euro-zone officials are working to magnify the firepower of the region’s rescue fund. This pushed the dollar down. Reuters”]  [/caption]
US gold rose 3.3 percent to $1,647.10. “In the last couple of days, the market over-reacted to the situation in the euro zone and the US,” said Cameron Alexander, senior metals analyst at GFMS, a unit of Thomson Reuters.
Gold’s appeal as a safe-haven asset remains intact, given the uncertainty in global growth and concerns about Europe’s sovereign debt, and strong investment demand is likely to push gold towards $2,000 by the end of the year, said Alexander.
Technical indicators suggested gold could see more short-term weakness. Spot gold may fall back to Monday’s intraday low of $1,534.49 later in the day, said Reuters market analyst Wang Tao, who is looking for even larger falls in the long term.
Investors are eyeing a key vote in the German parliament this Thursday to approve changes to the European Financial Stability Facility rescue fund.
“There may be another leg lower in gold, as people position themselves ahead of the EFSF votes in case there was a good outcome that would lead to a sell-off in the dollar and rising risk appetite,” said a Singapore-based trader.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.4 percent to 1,246.762 tonnes by Sept. 26, after standing unchanged for four sessions.
Physical buying has increased over the past week or so, as spot gold prices sank nearly 10 percent in the past four sessions.
“At the current level people are buying, because they believed what happened in the past few days was only a correction,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.
The premium on gold bars in Hong Kong had risen to more than $2 per ounce above spot prices, as a result of increased demand, he added.
Other precious metals also rebounded from Monday’s trough. Spot silver rallied 2.8 percent to $31.51, before easing slightly to $31.30. US silver jumped 5.4 percent to a high of $31.58, on course for its biggest one-day rise in two and a half months.
Reuters
 "Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty")
 "Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched")
 "Who is CP Radhakrishnan, India's next vice-president?")
 "Israel informed US ahead of strikes on Hamas leaders in Doha, says White House")
 "Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty")
 "Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched")
 "Who is CP Radhakrishnan, India's next vice-president?")
 "Israel informed US ahead of strikes on Hamas leaders in Doha, says White House")
](https://images.firstpost.com/wp-content/uploads/2011/09/goldre.jpg){kind=link}