The price of gold steadied on Wednesday, rebounding from a two-day losing streak, although the commodity stayed close to its lowest point in seven weeks as steady US manufacturing data triggered optimism about the economic outlook, with the bullion losing its usefulness as a safe haven.
Physical demand from China, the world’s largest consumer of gold, increased slightly.
While some analysts see gold prices declining as stocks rise, there is optimism that geopolitical developments in Ukraine and emerging physical demand could keep prices steady, according to Reuters.
Spot gold sold at $1,282.16 per ounce, having surged 0.3% by 0332 GMT, near its seven-week downside of $1,277.29.
Ed Meir, an analyst at INTL FCStone said a surge in world stocks would not automatically take investments away from gold as sentiments on equities market remained volatile.
“In addition, although the Russian-Ukrainian situation is receding in terms of urgency, it certainly is not over given that Russian troops are still massed on the Ukrainian border,” said Meir.
Conditions of political and economic uncertainty usually put gold in an attractive position for investors seeking to minimize exposure.
On the Shanghai Gold Exchange, 99.99% purity gold reached a premium price of about $1 for every ounce to spot gold prices, although the prices eased later to match London rates.
As Bloomberg reports, gold dropped 3.2% in March, partly on expectations of tapering of the economic stimulus by the US Federal Reserve.
Since the beginning of March, Shanghai prices of gold have discounted in response to dwindling demand. Traders reported discounts of up to $8-$10 per ounce.
Prices of silver for immediate delivery advanced 0.5% to reach $19.8701 per ounce in London. Platinum surged to $1,428.75 per ounce, gaining 0.3%. On the other hand, Palladium declined 0.3% to trade at $778.47 per ounce. Prices hit the highest point since August 2011, standing at $801.53 on Mar 24.
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