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Gold edges higher as euro climbs after EU treaty

Last updated: 14:59 09 Dec 2011 GMT, First published: 15:59 09 Dec 2011 GMT

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Gold prices edged higher today as traders responded to the deal reached by 23 of 27 EU members at today’s summit in Brussels with cautious optimism. The euro was on the rise this afternoon, while the safe-haven US dollar fell, lifting demand for gold, which is seen as an alternative asset to the greenback.

The deal calls for sanctions against countries that fail to keep its budget deficit within three percent of their GDP, while capping the size of Europe’s bailout funds at €500 billion.

In addition, EU policymakers have agreed to bring the launch date of the new permanent bailout fund, the European Stability Mechanism, forward by one year to July 2012.

The four EU members that refused to join the new treaty included the UK. British Prime Minister David Cameron pulled out of negotiations and used his veto power to block the proposed changes to the EU treaty as the deal failed to protect British interests.

The US dollar received some support from today’s US consumer confidence data that was released later in the afternoon.

The University of Michigan said its consumer sentiment index surged from 64.1 in November to 67.7 this month, hitting six month highs. The data topped expectations as analysts polled by Bloomberg News projected an increase to 65.8.

Gold traded at US$1,709/oz, up US$4 from Thursday’s close. Other precious metals were headed in the same direction as silver rallied 21 cents to US$31.87 and platinum added US$7 to reach US$1,500/oz.

Today’s top risers in the sector were:

KEFI Minerals (LON:KEFI), up 16.5 percent at 3.78 pence at midday

Condor Resources (LON:CNR), up 10.5 percent at 7.88 pence

Central Rand Gold (LON:CRND)
, up 4.5 percent at 0.408 pence

Serabi Gold (LON:SRB), up 4 percent at 8.98 pence

The top fallers were:

Sovereign Mines of Africa (LON:SMA), down 11 percent at 6.58 pence at midday

Solomon Gold (LON:SOLG), down 10.5 percent at 10.65 pence

African Consolidated Resources (LON:AFCR), down 8 percent at 2.3 pence

Patagonia Gold (LON:PGD), down 6.5 percent at 51.5 pence

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