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Gold Prices Climb on Europe Optimism

NEW YORK ( TheStreet) -- Gold prices rose Wednesday on positive news about Greece emerging from eurozone talks, and after U.S. equity and bond markets reopened after a two-day shutdown because of Hurricane Sandy.

Gold for December delivery rose $7 to close at $1,719.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,726.60 and as low as $1,709.80 an ounce, while the spot price was rising $11.20, according to Kitco's gold index.

"Expectations of rebuilding and more stimulus are helping today, weaker dollar, all of this still in a diminished trading participation, so markets will continue to be thin," George Gero, precious metals strategist at RBC Wealth Management, wrote in a note.

Silver prices for December delivery rose 50 cents to settle at $31.77 an ounce, while the U.S. dollar index was dropping 0.04% to $79.90.

The CME Group, which runs the major commodities futures exchanges, reopened its trading floor in lower Manhattan Wednesday after a two-day closure because of the storm.

German Finance Minister Wolfgang Schaeuble said in a news conference that "there was considerable progress" among the 17-nation Eurogroup on reaching a conclusion of reforms Athens must implement to receive new emergency loans, according to Reuters.

Gero noted that open interest was up 1,310 gold contracts before first notice day, which he said was constructive as funds were looking for rebuilding stimulus.

Investors had their eyes set on physical demand in India as the country neared its strongest season for gold sales, but Kitco Metals senior analyst Jon Nadler said confidence has weakened for a gap up as second-quarter Indian jewelry and investment demand dropped 40%.

"Global gold demand in that same trimester fell to its lowest level in more than two years," Nadler wrote in a note. "As well, hardly anyone seems to be covering the fact that Saudi Arabian gold shops -- which once numbered over 4,000 -- continue to close their doors, literally by the day."

Nadler said more than 1,500 Saudi Arabian gold shops have closed in the past five years, 500 of which have occurred in 2012.

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