Gold glisters as the dollar drops further

London: Gold rose towards $1,120 (Dh4,112) an ounce in Europe yesterday as the dollar hit a three-week low against the euro, helping the metal recover from the lows it hit in the previous session.

Traders are awaiting fresh direction from US retail sales data for February, a key measure of consumer optimism in the world's largest economy. This is likely to affect the dollar, and consequently gold.

Spot gold was bid at $1,118.00 an ounce yesterday morning, against $1,109.30 late in New York on Thursday. US gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose $9.80 to $1,118.00 an ounce.

"Today's firmer tone has largely been driven by the stronger euro and weaker dollar, and we are clustered around an area of reasonably decent support levels on the chart," said RBS Global Banking & Markets analyst Daniel Major.

From a technical perspective, gold has key support at $1,115 and $1,104, analysts said, as well as the psychologically important $1,100 level at which it bounced on Thursday.

However, the technical picture overall remains neutral, they added.

"Only a close back above $1,131 would inspire renewed calls for higher prices," said ScotiaMocatta in a note.

The euro rose to a three-week high versus the dollar yesterday as the US currency came under mild selling pressure ahead of US retail sales numbers due at midday.