LONDON, Jan 21: Gold recovered early losses to firm in Europe on Wednesday, boosted by interest in bullion as a haven from risk, but remained off the previous session’s 11-day high as the euro gave up gains versus the dollar.

Spot gold was quoted at $860.20/862.20 an ounce at 0941 GMT against $855.20 late in New York on Tuesday.

The precious metal hit a high of $865.80 on Tuesday as risk aversion prompted funds to buy the precious metal as a haven from risk. This interest is still supporting the precious metal, though a firm dollar is limiting gains.

Gold spiked up yesterday after falling to initial supports, said Pradeep Unni, senior analyst at Richcomm Global Services.

Gold looks likely to be supported by buying from risk-averse investors as the economic outlook remains murky, with more bad news expected to hurt equity markets.

Given the ongoing deterioration of the global economy and the risk aversion of investors the metal looks set to benefit further from safe-haven demand, said James Moore.

The world’s largest gold-backed ETF, New York’s SPDR Gold Trust, said its holdings rose 1 per cent on Tuesday to breach the 800-ton barrier for the first time ever.

With the economic outlook gloomy and worries about longer term inflation rife, investors’ confidence in bullion is firm.

The next few months gold is likely to be very volatile, said Fairfax investment bank analyst John Meyer.

However, longer term, the stimulus plans by the United States and printing of money are likely to lead to devaluation of the dollar which will lift gold prices.

Among other precious metals, silver climbed to $11.42/11.50 an ounce from $11.11 late in New York on Tuesday. Platinum was relatively steady at $932/937 an ounce from $937.50, while palladium was unchanged at $182/187 an ounce against $182.

Both metals have steadied after posting dramatic losses on the back of falling demand from the automotive industry, which typically accounts for some 50 per cent of platinum and palladium demand.—Reuters