Updated from 3 p.m. EDT with closing prices of mining stocks
Gold for August delivery settled up $53.80 at $1,604.20 an ounce on the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,605 and as low as $1,551.30 an ounce, while the spot price jumped $47.10, according to Kitco's gold index.
"It does seem to be a positive reaction across the board to the sort of news that we've seen out of Europe," said James Moore, an analyst at FastMarkets.com. "I think obviously the initial news is positive -- we have yet to really see the full details of it -- and again I'm a little bit skeptical that perhaps again it's a sign that the officials are kicking the can a little bit further down the road."
Silver prices settled $1.33 higher at $27.58 an ounce while the U.S. dollar index was dipping 1.34% to $81.59.
Many analysts expressed earlier this week low expectations from the European Union summit planned for Thursday and Friday, but analysts also hinted there could be a sizable move in gold if the leaders offered any tangible progress.
This week had been a rather bearish period for precious metals, and gold slipped or traded sideways as some investors rushed to U.S. dollars on better-than-expected housing prices that signaled a possible reprieve from sluggish economic growth.
"Gold sharply up almost 3% today as inflationary earlier-than-expected stimulus is bringing investors in to take advantage of recent selling to rebuild positions," George Gero, a financial consultant at RBC Wealth Management, wrote Friday in a note.
Fundamentally, gold has found more support as it hovers around $1,600 range, according to Moore. Silver and palladium have proven to be a less positive investment than gold.
There has been an uptick in retail investment interest in gold, Moore said.
The uncertainty that could undercut a prolonged gold rally is whether European leaders will release greater details of their pact. Barring more clarity from leaders during Friday's session, it appears investors may have to wait a few more weeks for more concrete particulars to trade on.
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