Gold price heads for biggest weekly rise in 4 months on Cyprus
Gold traded near a 3-1/2-week high on Friday, underpinned by safe-haven demand on the fear of a potential financial meltdown in Cyprus, which has put bullion on track for its biggest weekly rise in four months.
The clock is ticking for Cyprus to come up with a solution to clinch an international bailout, otherwise it could face the collapse of its financial system and likely exit from the euro zone.
The Cyprus crisis has offered gold a helping hand, after investors had been pulling out of the precious metal and piling into stock markets which have rallied this year on a brighter economic outlook.
"Gold is likely to stay firm in the short term thanks to Cyprus," said Li Ning, an analyst at Shanghai CIFCO Futures.
"Though Cyprus is a small economy, there are concerns about the risk of contagion if the crisis there doesn't get solved properly."
Euro zone finance ministers offered a $13 billion bailout last weekend but demanded a levy on deposits in Cyprus, which shocked investors and triggered worries that similar measures could be imposed on other countries.
Spot gold was little changed at $1,613.90 an ounce by 0142 GMT, after rising to a 3-1/2-week high of $1,616.36 in the previous session. The metal was headed for a weekly gain of about 1.4 percent in its third weekly ascent, its biggest weekly rise in four months.
U.S. gold traded nearly flat at $1,613.30, on course for a 1.3 percent weekly gain.
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