The PRICE of Gold Investment bullion rose 2.0% from yesterday's low in early London wholesale trade on Thursday, touching $1569 per ounce as European stock markets also rose from new 2012 lows.
Commodities stemmed the week's sharp falls, and the Silver Price rallied 3.4% to trade above $28 per ounce.
The Euro currency also bounced, but only after slipping to $1.2520 – its lowest level since June 2010.
Gold Investment analysts noted that Wednesday's low was the market's fourth "test" of $1535 since gold hit record peaks abov $1900 per ounce in late-summer last year.
"We assume Grexit occurs on Jan. 1 2013," says Citigroup economist Michael Saunders in a new report, raising the odds of a Greek exit from the Eurozone to 50-75% "in the next year or two."
Citi's base scenario sees "Greece staying in the European Union and receiving external loan support" – an idea mooted by German weekly magazine Der Spiegel ahead of Wednesday night's "informal" summit of EU leaders.
Herman Van Rompuy, president of the European Council, said after the meeting that Greece's partners want it remain in the Eurozone, but Athens must "respect its commitments."
The Eurogroup Working Group – which advises Eurozone finance ministers – has "agreed that each [member] should prepare a contingency plan for the potential consequences of a Greek exit," Thomson-Reuters today quotes an un-named official.
"The immediate Greece impact is manageable," reckons Germany's banking association BdB.
"I think [an exit] has been priced in by markets," says general manager Andreas Schmitz.
US, German, Japanese and UK government bonds all ticked higher Thursday morning, nudging interest rates for their "safe haven" debt down towards new record lows.
Core Eurozone stock markets also rose, but remained more than 6% down for May so far.
The Athens stock market shed another 3%, extending its fall towards quarter-century lows, but Madrid pushed 1.8% higher after the Spanish government injected €11 billion into part-nationalized Bankia lending group.
Thursday's drop in the Euro raised the price of physical Gold Investment in wholesale bars to €40,000 per kilo – reversing all of the week's previous 2.1% drop.
Even so, "The correlation with Euro/Dollar is quite strong at the moment," notes Credit Suisse analyst Tom Kendall.
"Today we've seen the Euro come back off its immediate lows ... and that has helped the precious metals get a bid again."
The 1-month rolling correlation of Dollar Gold Prices with the Euro/Dollar exchange rate – which would read 1.00 if they moved perfectly in lock-step – rose above 0.94 on Wednesday.
Gold's correlation with the Euro has only been stronger on 14 trading days in the last 675, since Athens first revealed a "black hole" in its government accounts and raised the 2009 budget deficit forecast to 12%.
"If gold moved entirely in lockstep with EUR/USD movements," says market-maker HSBC's precious metals team, "we would expect the bullion market to be much closer to $1100" – the level of Gold Investment prices when the Euro last traded at $1.25
"That gold now is $460 per ounce higher implies it may have some other underlying supportive factors" beyond a simple Euro connection.
New Gold Investment by emerging-market central banks continued in April, new data from the International Monetary Fund showed this morning, with Mexico, Kazakhstan and Ukraine all adding metal to their holdings.
The Philippines' Gold Investment reserves rose at the fastest pace since Lehman Bros. collapsed in Sept. 2008, up by 32 tonnes to a total of more than 194.
"[This will] gather much attention from market participants," says Edel Tully, precious metals strategist at Swiss bank UBS. "[It] should somewhat help sentiment for gold."
Central bank gold buying in the first 3 months of 2012 totaled 81 tonnes, according to latest data from market-development organization the World Gold Council.
That was equal to nearly four-fifths of all Gold ETF and new coin demand from private investors.
"Overall higher global central bank and invest-ment demand almost balanced out the drop in demand from the jewellery and industrial sectors," notes Oliver Heuschuch at Heraeus' headquarters in Hanau, Germany.
Looking at the refiner's own flows, "Sales of Gold Investment bars in the last three weeks were significantly up, even though this has so far had no effect on the price of the metal," Heuschuch says in his latest weekly report.
In Asian trade overnight, "Gold Prices held fairly steady," says Standard Bank's daily note, "with profit-taking balanced by a resurgence in physical demand."
"Everyone is worried about Greece withdrawing from the Eurozone and [about] the global economy," says Dick Poon, head of precious metals at German refiner Heraeus' Hong Kong office, "and would rather keep cash on hand than buying anything."
Flash estimates for China's manufacturing activity pointed today to a further slowdown in April. Eurozone manufacturing activity quickened its contraction, with Germany's Ifo business sentiment survey also coming in worse than analysts forecast.
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