Gold bounces from 2-week low as dollar dips
LONDON (Reuters) - Gold rebounded on Thursday, rising by almost 2 percent to move back above $800 an ounce as the dollar eased off an 8-month high against the euro.
Bargain hunting and physical buying also boosted prices after the metal had slipped close to its lowest level in nine months on Wednesday following a broad-based dollar rally and weaker oil prices.
Platinum also posted strong gains in volatile trade, with the metal rising by more than 3 percent on the day as bargain hunters emerged following a series of heavy losses for the autocatalyst material.
Gold rose to a high of $814.70 an ounce before easing slightly to trade at $810.00/811.00 at 6 a.m. EDT from $800.05/801.65 an ounce late in New York on Wednesday, when it extended consecutive losses to a fourth day.
"Gold has held up pretty well given the stiff head winds it has been facing in terms of the dollar's rally of late," said Standard Chartered analyst Daniel Smith.
"While limited investment demand has pushed prices down lately, strong physical demand globally is proving supportive, and with oil rising and the dollar turning towards weakness today gold has been able to move higher."
Dealers saw purchases from jewellers in Indonesia ahead of the Eid al-Fitri Muslim holidays in October and safe-haven buying from Thailand, where Prime Minister Samak Sundaravej refused to quit as his opponents vowed to keep up a street campaign to unseat him.
"We are still seeing physical demand from Thailand and Indonesia, with prevailing premiums for bars at $1.50 an ounce," said a physical dealer in Singapore. "The market is still short of physical gold at the moment," he said.
Gold fell as low as $789.05 an ounce on Wednesday, near its nine-month low of $773.90 seen in mid-August, with dollar strength and the decline in oil prices reducing the metal's appeal as a hedge against inflation and currency weakness.
Demand from India, the world's largest consumer, and also the Middle East helped to stem the fall.
"It looks like we are getting some kind of recovery. One might say around $790 is going to provide support on the downside. I think we need to break that to see a stronger move lower," said Darren Heathcote of Investec Australia in Sydney.
India is stepping up purchases during the festive season, which peaks in October with Diwali, the Hindu festival of lights.
However, there are concerns that strong demand during August from key market Turkey may falter due to volatile prices and the end of the wedding season.
Later on Wednesday investors will be watching for interest rate decisions from the Bank of England and the European Central Bank, which may set the tone for the dollar's next move.
VOLATILE PLATINUM Continued...
