Gold set for biggest weekly rise in six months

LONDON, Dec 12 (Reuters): Gold prices steadied on Friday, on track for their biggest weekly rise since June, as the dollar retreated and sliding oil prices hurt risk appetite, prompting another drop in stocks.

Gold is up 3 per cent so far this week. Weakness in stocks has prompted some investors to buy the metal as an alternative asset, while a drop in the U.S. unit made dollar-priced bullion cheaper for other currency holders.

Spot gold was flat at $1,227.30 an ounce at 0956 GMT, while U.S. gold futures for December delivery were up $2.30 an ounce at $1,227.90.

"Gold and silver have both had a very good week, going against the trend seen elsewhere," Saxo Bank's head of commodity research Ole Hansen said. "We have reached levels which short sellers have been attracted to in the past and this may slow the positive momentum that has emerged during the past week." "Overall there is a feeling out there that traders are now going defensive on their positions and this is weakening the dollar, thereby adding some support to precious metals."

The dollar index was down 0.3 per cent on Friday and European stocks slid another 1.4 per cent, with further declines in the price of oil hitting energy stocks and political concerns over Greece also curbing risk appetite.

Benchmark Brent crude oil futures fell 1.3 per cent to below $63 a barrel, the lowest since July 2009, hurt by a global supply glut and a sluggish demand outlook. Brent is down 8 per cent this week, and 45 per cent below its June peak.