NEW YORK, Jan 17: Gold prices rose nearly 3pc on Friday, breaking above $840 an ounce, on a sharply lower dollar against the euro, lingering economic worries and signs of strengthening investment demand.

Spot gold was at $840.30 an ounce at 2:55 p.m. EST (1955 GMT), up 2.8 per cent from the last trade of $817.45 on Thursday.

US gold for February delivery settled up $32.60, or 4 per cent, at $839.90 an ounce on the COMEX division of the New York Mercantile Exchange.

US metals markets will shut Monday for the Martin Luther King Jr. holiday and reopen for regular trade Tuesday.

Gold ignored short-term deflation concerns. US inflation slowed to a half-century low last year, with the Consumer Price Index dropping a sharp 0.7 per cent in December, a third straight monthly decline.

The fall in headline CPI was a bit less than the market had priced in, and core CPI was unchanged, so that was supportive of gold, said Dresdner Kleinwort consultant Peter Fertig.

A recovery in the euro and the equity markets was supporting the precious metal, he added.

The dollar extended losses versus the euro after the government report showing a continued drop in US consumer prices, helping revive appetite for other currencies. In addition to the weak dollar, interest in bullion as a haven from risk was also lifting gold, analysts said.

Among other precious metals, platinum and palladium were steady, benefiting from gold’s strength and the dollar’s weakness, but picking up little fresh momentum as traders continue to worry about the outlook for demand.—Reuters