Reuters/London
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Bargain-hunters helped gold to rebound from a six-month low hit in the previous session as Asian players returned to the physical market from a week-long holiday.
Gold rose 0.2% to $1,611.45 by 1113 GMT, having fallen to $1,598.04 on Friday on heavy technical selling pressure. US gold for April delivery inched up 0.4% to $1,616.40.
The metal’s inability to break above $1,700 in recent weeks and the fall through key support levels left it vulnerable to further losses in the absence of Asian physical traders last week, when prices slipped 3.8% slip, the largest since May last year.
“After the technically driven sell-off, probably exacerbated by the lack of physical interest from Asia, the phones are not exactly ringing off the hook, but we have a lot of interested physical clients from India looking to take advantage of current weakness,” Jeffrey Rhodes, CEO of INTL Commodities, said.
Chinese participants returned from a week-long holiday yesterday, providing some renewed support to nervous investors.
Spot contract for gold of 99.99 purity on the Shanghai Gold Exchange dropped to 326.40 yuan ($52.37) a gram, its lowest in nearly seven months. The fall triggered strong physical buying, with volumes exceeding a record high of 22 tonnes on SGE.
“This week investors in China return with a strong desire to pick up metal at cheaper prices, with turnover on the SGE surging to an all-time high,” broker UBS said in a note.
“This should help calm some of the uneasiness, but unless there is a strong fundamental upside catalyst, gold is likely to struggle and a move below $1,600 could not be ruled out with certainty at this stage.”
In other precious metals, spot platinum was up 0.4% to $1,683.75 an ounce, after declining to a two-week low of $1,668 in the previous session. Palladium was down 0.1% at $752.47, well below the $775 hit on Wednesday, its best since September 2011.