Gold eyes biggest weekly gain in months on Cyprus woes

  Gold was on course for its biggest weekly gain in four months, after safe-haven buying prompted by crisis in Cyprus took the price to a 3-1/2 week high in the previous session.

Reuters report Friday showed that spot gold was down 0.2 percent on the day at $1,611.36 an ounce by 1124 GMT, still leaving prices on course for a weekly gain of about 1.3 percent in its third weekly rise.

Cyprus was still scrambling to avoid a meltdown of its banking system and a possible exit from the euro, with the European Union giving the country until Monday to raise 5.8 billion euros to secure a 10 billion euro ($13 billion) international lifeline.

Bullion hit its highest since February 26 on Thursday at $1,616.36 an ounce, with the situation in Cyprus helping to pluck the metal out of a downtrend caused as normalising economic conditions took prices to their lowest since mid-July.

“Cyprus will likely remain the focus for another week until the start of April, when we will see a shift to other economic data,” Standard Bank analyst Walter de Wet said.

In euro terms, the metal has gained 2.6 percent so far this week, its strongest performance since early November. U.S. gold futures for April delivery traded at $1,611.60, down 0.1 percent.

Even though the market’s complexion had changed somewhat, prospects for a deal were capping progress with analysts citing some concern on the slow pace of gains in gold.