Gold jumps as dollar declines

Gold prices jumped to the highest price in a week on Friday, rising for a second day, as the U.S. dollar fell versus the euro and traders noted a sense of returning willingness among investors to buy riskier assets, including commodities.

Gold futures for April delivery added $10.40, or 0.8%, to $1,118.90 an ounce, the highest since a week ago. It briefly rose as high as $1,119.50, back near the highest in a month.

Prices are still headed for a 0.2% weekly decline.

"Gold has a split personality in a schizophrenic market," said Jay Feuerstein, a commodities trader and founder of 2100 Xenon. "Sometimes gold trades like a de facto currency and sometimes it participates in a flight to quality, and now it's battling between the two."

Some investors may be buying gold as the weak data increases its investment appeal as a hard asset.

But also, as stocks gain and the dollar falls, commodities may join other so-called risky assets as investors move away from safer positions, like in the dollar. Read more on gold's decoupling from the dollar.

The U.S. dollar index, which tracks the greenback versus a basket of rivals, headed down after weak data on existing-home sales and consumer confidence. See story on existing-home sales.

The euro rose to buy $1.3618, from $1.3554 in late New York trading on Thursday, aided by a media report that a German bank may help Greece address its financial needs. See more on currencies.

"The metal is likely to continue to track the euro and broad risk sentiment in the coming sessions; however, dips are expected to draw further strong support from both jewelry and investment players and should provide a floor," said analysts at TheBullionDesk.com.

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