This says the worst may be over[url][/url]Gold Settles Up at $1,392 as US Stock Markets Fall EpisodesCNBC ProGold Gold Settles Up at $1,392 as US Stock Markets Fall
Text Size Published: Wednesday, 12 Jun 2013 | 4:19 PM ET Twitter
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Getty Images Gold prices ended about 1 percent higher on Wednesday, as losses in U.S. equities and a drop in the U.S. dollar prompted the metal to rebound from the previous session's three-week low.
After earlier range-bound trade with no major U.S. economic data, bullion extended gains in late morning trade as the S&P 500 index fell almost 1 percent on persistent worries over how soon central banks will begin to scale back supportive measures.
Better investment demand, reflected by the absence of fresh outflow from the world's largest gold-backed exchange-traded fund SPDR Gold Trust, also boosted bullion investor sentiment.
"It's a sign that the worst of the money outflows in the gold market is over. We are still not out of the woods but at least it shows that the gloom-and-doom forecast of $1,000 gold is unrealistic for now,'' said Bill O'Neill, partner at commodities investment firm LOGIC Advisors
Spot gold rose 0.6 percent at $1,387 an ounce. U.S. gold futures closed $15 an ounce higher to $1,392.
Bullion hit a three-week low at $1,367 on Tuesday after lack of new economic stimulus from the Bank of Japan fueled worries that other central banks may also withdraw their support, denting bullion's inflation-hedge appeal.
Play VideoGold Rebounds
Gold is poised to close near session highs, reports CNBC's Sharon Epperson.U.S. gold futures for August delivery settled up $15 an ounce to $1,392.
Gold also benefited as the dollar index slipped 0.2 percent, as the greenback tumbled against the y
Analysts said volatility in financial markets may continue until the Fed's meeting next week and an accompanying statement from Fed Chairman Ben Bernanke on Wednesday.
"Markets will however wait for cues from the Fed next week,'' Pradeep Unni, a senior analyst at Richcomm Global Services, said. "Lower imports from India after the duty hike will also be negative for gold.''
Buying Soft in India, China
Demand was subdued in India, the world's largest gold consumer, which last week moved to cut gold imports by lifting import duties to 8 percent. Gold imports have been a major contributor to India's wide current account deficit.
A lack of physical trading in China, whose markets are shut due to the Dragon Boat Festival holiday, further undermined gold, dealers said.
Bullion held by SPDR Gold Trust was unchanged after the ETF reported its largest inflow in over a month on Monday—2.7 tons. Its holdings remained near four-year lows, however, down 340 tons this year.