Gold bounces off on safe-haven buying, weaker dollar

CHICAGO, Nov. 2 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange rallied on Wednesday, ending a three-session losing streak, buoyed up by increasing concerns over the potential default on Greece's debt which would send shock waves through Europe's financial system and foreign banks and financial institutions that hold Greek bonds.

The most active gold contract for December delivery rose 17.8 dollars, or 1 percent, to 1,729.6 dollars per ounce.

A trader mentioned that market concerns worsened after the Greek cabinet said early Wednesday it has endorsed Prime Minister George Papandreou's plan to hold a referendum on the European Union debt relief deal.

And the increasing fear prompted investors to flock to safe- harbor assets such as precious metal and currencies, as they worried the debt-relief plan would unravel and Greece would default on its international loans.

Meanwhile, the U.S. dollar failed to hold on to its previous gains, and dropped against a basket of other major currencies ahead of a statement from the Federal Reserve's policymaking committee. The weaker greenback also buoyed up investment in dollar-denominated commodities, as it makes them cheaper to holders of other currencies.

The precious metal also gained some support from lingering trade expectations that the U.S. Federal Reserve may initiate a third round of quantitative easing in the near future, as Fed Chairman Ben Bernanke's press conference on Wednesday may reveal clues about how close the central bank is to another round of asset purchases.

Some traders believed that gold rallied with other risky assets such as stocks and commodities on Wednesday, as upbeat sentiment in other markets encouraged investors back to the bullion, after a better-than-expected reading on U.S. private-sector jobs growth encouraged modest risk tolerance.

Silver for December delivery jumped 1.212 dollars, or 3.7 percent, to 33.943 dollars per ounce.