| NEW YORK
NEW YORK Gold staged a dramatic mid-session turn-around in heavy trade on Wednesday, rebounding more than $30 an ounce as a deepening sell-off in riskier assets rekindled safe-haven demand and technical bids kicked in at a key support level.
The abrupt reversal at mid-morning prevented gold from dropping below $1,530 an ounce, near this year's lows. Traders said the deepening euro zone crisis may encourage anxious investors to turn to gold to protect their portfolios against economic uncertainty.
Gold rose by 0.6 percent by day's end, breaking from its recent trend of trading in sync with equities and other commodity markets. Oil fell by more than 3 percent and U.S. stocks dropped by around 1.5 percent, while the dollar and U.S. Treasuries rallied on jitters over the crisis in Europe.
"This morning's reversal (shows) that people are starting to come to grips with the fact that there isn't any fast and easy solution in Europe," said James Dailey, portfolio manager of TEAM Financial Asset Management.
"And if things start to really get out of hand in Spain and Italy, that means gold can catch a bid."
The European Commission offered Spain more time to reduce its budget deficit and direct aid from a euro zone rescue fund to capitalize distressed banks. Greece's election next month could also send the region's crisis spiral out of control.
Bullion investor sentiment remained fickle as the price of gold has lost $100 in the last four weeks, and is about even since the start of the year. It was down 6 percent in May, its biggest monthly decline since December.
Spot gold was up 0.6 percent at $1,563.60 an ounce by 4:16 p.m. EDT (2016 GMT), having hit a two-week low of $1,531.49.
U.S. COMEX gold futures for June delivery settled up $14.70 an ounce at $1,563.40.
U.S. futures trading activity was unusually frenetic for a second day, logging around 350,000 lots versus the 30-day average at about 180,000 lots, preliminary Reuters data showed. Tuesday's COMEX trading volume -- which included light trade on Monday, a U.S. public holiday-- hit an all-time high at 484,721 lots, surpassing the previous record from August 24, 2011.
TECHNICALS, US PAYROLLS EYED
Technical buying helped lift the metal after bullion fell close to resistance around $1,530 an ounce and rebounded for the third time in two weeks.
Sarhan Capital CEO Adam Sarhan said if gold holds support between $1,520-30, it should keep moving sideways, trading below major moving averages and its long-term uptrend.
Attention is already shifting towards U.S. employment data on Friday, which is expected show the world's largest economy added 150,000 new jobs in May. Any disappointment would likely mean more market volatility.
Earlier this year, gold had gained 15 percent after the U.S. Federal Reserve said it would keep interest rates near zero until at least late 2014.
Since then, however, investors have shunned gold due to a lack of economic stimulus from central banks. On Tuesday, the safe-haven metal actually fell more than other commodities on jitters surrounding the European sovereign debt crisis.
Among other precious metals, silver rose 0.4 percent to $27.93 an ounce. Platinum was down 2 percent at $1,395.99 an ounce, while palladium edged up 0.4 percent at $603.72 an ounce, as both platinum group metals followed industrial metals which fell sharply on economic concerns.
(Additional reporting by Jan Harvey and Amanda Cooper in London; Editing by Dale Hudson and David Gregorio)