Gold regained some footing on Wednesday, after dropping more than 1 percent in New York, as the euro inched up against the US dollar and bargain hunting resurfaced
Gold regained some footing on Wednesday, after dropping more than 1 percent in New York, as the euro inched up against the U.S. dollar and bargain hunting resurfaced.
Investors in Japan have been active buyers this week, partly due to a stronger yen against the U.S. currency which makes dollar-priced gold bars cheaper to buy. Dealers also noted buying from jewellers in India, the world's largest consumer.
Gold was trading at $735.35 an ounce, up $4.60 an ounce from New York's notional close on Tuesday, when a firmer dollar, worries about a global recession and weakness in other commodities sparked selling from speculators.
"Buying from private investors in Japan supports gold. Funds are getting out of the market but $700 is a big support," said Yukuji Sonoda, analyst at Daiichi Commodities in Tokyo, referring to a level last seen in September 2007.
"There's a very strong actual demand. While the Japanese are buying ingots, the Indians are buying jewellery products," he said.
Gold has bounced more than 7 percent since falling to a 13-month low of $680.80 in October and is struggling to sustain the uptrend due to a deteriorating global economy and weak equities, which drove investors to cash in to cover losses.
But dealers said physical buyers would buy on dips and demand in India was picking up during the wedding season, which starts in October and lasts through early 2009.
Bullion is well below a record high of $1,030.80 struck in March.
"We've seen bits and pieces of buying because of a firming euro and yen. Part of the buying is done by the Japanese and there's also bargain buying elsewhere," said a dealer in Hong Kong.
"I haven't seen much buying from the jewellery sector yet but we heard demand is pretty good in India. In general overall trading is kind of sluggish as we approach the year-end," he said.
Gold jewellery forms an important part of a dowry in India as parents prefer to give gold to their daughters for financial security. India devours 800 tonnes of the metal, more than 30 percent of annual global gold mine production, mostly as jewellery.
In the currency market, the dollar fell to 99.57 yen, while the euro inched up to $1.2548 after touching a two-week low of $1.2477 ahead of a G20 summit in Washington this weekend.
The Nikkei shed 2 percent on worries about the health of the global economy.
Oil extended losses on Wednesday, after settling below $60 for the first time in 20 months the previous day, as fears of the spreading economic downturn deepened demand worries.
Platinum was trading at $822.00 ounce, up $9.50 from New York's notional close on Tuesday.
New York gold futures added $2.8 an ounce to $735.6.