Gold rises after heavy loss as dollar stumbles

London : Gold rose one per cent in Europe yesterday, recouping some of the previous session's hefty 3.5 per cent losses, as the dollar ceded some ground after hitting a 3-1/2 month high against the euro in the previous session.

Spot gold was bid at $1,109.60 an ounce at 1200 GMT, against $1,097.80 late in New York on Thursday. US gold futures for February delivery on the Comex division of the New York Mercantile Exchange rose $3.70 to $1,111.10.

Prices have found good support around $1,080-1,100, analysts say, but they may be vulnerable to further losses through to year-end, especially if further dollar strength is seen.

"Trading will be relatively thin in the coming days so investors may be reluctant to take on positions in this market, and may be closing some positions," Commerzbank analyst Eugen Weinberg, said. "As most investors have been on the positive side, the closure of those long positions might dampen sentiment and might dampen prices."

Weighed on

Currency effects also weighed on gold, with the dollar ceding some ground to the euro.

The single currency fell to its lowest since early September on Thursday after S&P became the second ratings agency this month to downgrade Greece.