Gold Trades at Record Highs in Europe

Gold held within reach of record highs in Europe on Friday, supported by haven demand against a backdrop of persistent sovereign risk in Europe and after lackluster U.S. data raised doubts over wider economic recovery.

Photo: Gold Trades at Record Highs in Europe

The precious metal's gains were limited, however, as immediate concern over the euro's outlook were allayed by solid demand at Spanish bond auctions, which calmed peripheral euro zone debt markets, Reuters reports.

The metal, set for an eighth weekly gain in nine weeks, rose to within 0.4 percent of a record $1,252.11 an ounce set last week. U.S. data yesterday showed slowing manufacturing growth and an increase in jobless claims. European Union leaders yesterday agreed to disclose how banks perform on stress tests, seeking to show the financial system can withstand shocks.

Gold has climbed 13 percent this year, outperforming stocks, bonds and many other commodities, amid speculation that debt-cutting measures by European nations will slow growth. The euro has dropped 13 percent against the dollar this year, while the MSCI World Index of equities is down 4.5 percent. Raw materials as measured by the Reuters-Jefferies CRB Index fell 7.1 percent this year, BusinessWeek says.