(Reuters)- On Thursday, gold rose after decreasing 12% in the past eight sessions, where weak U.S. economic growth data hit the dollar and yet reduced worries of an unexpected end to the Fed’s monetary stimulus.
However, gold remains not far from Wednesday’s near three-year low, by its safe-haven appeal ruthlessly hurt since Ben Bernanke Fed Chairman stated a policy last week to cut down the central bank’s $85 billion monthly bond purchases in the next few months. That would support an upsurge in interest rates, leading gold to comparatively reduce its appeal.
Spot gold increased 0.5% to reach $1,232,66 an ounce by 09:33 GMT, after a 4% drop on Wednesday that took the yellow metal to the lowest since August 2010 by $1,221.80.
Comex gold increased $3 to reach $1,232.80, as well near three-year lows reached in the previous session.
MKS Capital senior vice president Bernard Sin said “The market looks technically oversold, and prices should see good support at $1,200,”
Meantime, the USD dropped for the first time in more than a week, whereas European shares were mixed after Wednesday’s descending revision in U.S. first-quarter growth. Investors were now in anticipation of pending home sales and U.S. weekly jobless claims upcoming in the day.
Gold lost over 26% for the year and heading towards its worst quarterly performance since at least 1968 after investors backed down.
ABN Amro was the latest to cut its gold price forecasts, lowering its 2013 year-end gold forecast to $1,100 an ounce from $1,300 and 2014 year-end price to $900 from $1,000, quoting liquidation in funds.
On Wednesday, holdings of the SPDR Gold Trust, the world’s largest exchange-traded gold fund, remained unchanged, when posting their second-biggest percentage loss in holdings this year on Tuesday – down by 1.7% (16.23 tons) – their lowest levels in over four years.
The top two consumers India and China are still not picking up on their physical demand in, as in mid-April when prices dived down to the deepest since 30 years.
India is whirling around the impact of new import curbs, whereas China markets are being disturbed by worries around a credit crunch.