Gold gains as dollar falls as E.U. eases austerity stance

Gold prices rose in U.S. trading on Friday, after European Union policymakers relaxed budgetary deficit targets, which sent the euro gaining against the dollar, often a recipe for climbing gold prices.

Gold and the dollar tend to trade inversely from one another.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.10% at USD1,592.40 a troy ounce in U.S. trading on Friday, up from a session low of USD1,587.60 and down from a high of USD1,597.80 a troy ounce.

Gold futures were likely to test support USD1,575.80 a troy ounce, Thursday's low, and resistance at USD1,598.00, Wednesday's high.

At a summit earlier, E.U. leaders granted countries such as France, Spain and Portugal extra time to narrow deficits, which gave the single currency room to rise. 

Elsewhere, E.U. and International Monetary Fund officials were outlining a financial assistance package for Cyprus, which stoked appetite for risk-on assets such as gold as well.

Data on both sides of the Atlantic also sent the dollar falling and gold rising.

The eurozone's year-on-year consumer price index remained unchanged at 1.8% in February, in line with expectations. 

The core consumer price index, which excludes food, energy, alcohol, and tobacco, remained unchanged last month at 1.3%, also in line with expectations.

In the U.S., the country's consumer price index rose 0.7% in February from January, more than market calls for a 0.5% increase.

The U.S. core consumer price index, which is stripped of volatile food and energy costs, rose 0.2% in February, in line with expectations. 

Investors viewed U.S. inflation rates as contained and sold the dollar on sentiments that while the Federal Reserve will eventually wind down stimulus measures one day, the U.S. central bank won't rush to tighten monetary policy.

Falling consumer sentiment data cemented such sentiments.

The Thomson Reuters/University of Michigan's preliminary consumer sentiment reading for March came to 71.8, the lowest since December of 2011 and well below analysts' calls for a 78.0 reading.

Elsewhere on the Comex, silver for May delivery was flat at USD28.807 a troy ounce, while copper for May delivery was down 0.43% and trading at USD3.521 a pound.