Last Updated : 30 November 2009 at 10:20 IST

Gold shows signs of recovery in Asia

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SINGAPORE (Commodity Online) : Gold prices remained highly volatile in Asian trade Monday but may bounce back on weak dollar and UAE central bank intervention in Dubai crisis.

Spot gold was seen trading at $1,176.56 at 11.00 a.m Singapore time compared Friday’s close of $1173.63 an ounce while US gold futures for December delivery was at $1,169.20 per ounce, compared to Friday’s close of $1,174.20 an ounce at Comex.

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February-delivery gold rose 0.1 percent to $1,176.50 an ounce on the New York Mercantile Exchange’s Comex division.

The metal, which reached an all-time high $1,195.13 on Nov. 26, gained as much as 0.4 percent Monday. Bullion hit a low of $1,136.80 an ounce on Friday, the lowest since Nov. 20.

The precious metal rebounded after slumping as much as 0.8 percent as the Dollar Index, a six-currency gauge of the dollar’s value, weakened after two days of gains.

The U.A.E. central bank said Sunday it stands behind the country’s local and foreign banks, which would face losses from Dubai World’s possible default.

Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities. The news led to a slump in global financial markets.

Gold, up 33 percent this year, is set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect themselves from potential currency debasement and inflation. The Dollar Index slid 8.2 percent this year.

China, the world’s largest gold producer, may break records for both demand and output this year as jewelry consumption soars and mining companies expand production after prices reached all-time highs, according to the China Gold Association.

China’s gold production increased by an average 9.5 percent in the past eight years. It said.

Among other precious metals, silver rose 0.7 percent to $18.43 an ounce, platinum gained 1 percent to $1,455 an ounce and palladium increased 1.1 percent to $368.75 an ounce.