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Gold rises 0.4% after three-day losing streak

Gold edged higher after three days of losses, finding support among physical buyers that offset pressure from a rebound in US stocks as Congress drew nearer approving a $700 billion bailout.

Spot gold was quoted up $3.55 or 0.4% at $879.30/882.30 per ounce compared with the previous nominal close of $875.70. Prices eased this week since ending on Monday at just above $900, their highest since August 1.

The near-term technical trend weakened slightly after the cash price dipped below the five-day moving average of around $884.

Gold has gained about 20% since September 11 as safe-haven demand heightened, when a collapse in the share price of Lehman Brothers raised questions about the stability of the US and global financial sector.

But hope that the US government's bail-out would soon help restore confidence in the system, slowing the flight from risk, lifted US stocks on Thursday, with the Dow Jones industrial average was up 196.89 points, or 1.82%, at 11,022.06 and the Nasdaq gaining 1.43%.

A strong dollar also weighed on gold, but the metal's losses were limited by Thursday's gains in oil. US crude oil futures settled up $2.29 at $108.02 per barrel.

Bullion holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at a record 724.94 tons as of Wednesday.

Gold futures contracts on the Tokyo Commodity Exchange were expected to open lower following falls in the spot price the previous day. (Reuters)