LONDON, Oct 31: Gold rallied higher in Europe on Friday, bolstered by the dollar losing ground against the euro, which makes the dollar-denominated safe haven asset a better buy for holders of other currencies.

Bullion had soared above $390 an ounce on Thursday morning, moving tantalizingly close to the seven-year highs reached last month at $393.30, but then retreated sharply on news that US Gross Domestic Product in the third quarter had overshot economists’ forecasts and grown at the fastest pace in nearly two decades.

Friday saw the release of Chicago Purchasing Management data and the University of Michigan consumer sentiment figures. The National Association of Purchasing Management-Chicago said on Friday its index of Midwest manufacturing activity came in for October at 55, up from 51.2 in September, but below analysts’ expectations of 55.5.— proving slightly supportive to gold.

The dollar had risen to a 10-day high against the euro of $1.1610 in Asian trade, but then weakened to $1.1649 after the data.

“A bit of buying emerged on the gold this afternoon after a bit of a static session this morning — it looks like people are doing the usual Friday afternoon thing of getting long to hedge against anything unusual at the weekend,” one dealer said.

At 1533 GMT, spot gold was trading at $387.75/388.45, having clawed back some ground from the previous New York close at $383.40/384.25. It was fixed in London on Friday afternoon at $386.25 an ounce. Dealers said that any further moves higher would be related to renewed dollar weakness.—Reuters