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Gold rises from over 3-week low on bargain hunting
[BENGALURU] Gold prices rose on Wednesday as investors used dips to accumulate the yellow metal after it dropped more than one per cent to its lowest in over three weeks in the previous session.
Spot gold was up 0.5 per cent to US$1,331.23 per ounce, as of 0722 GMT. Prices fell over 1 per cent to hit its lowest since Jan 11 at US$1,319.96 on Tuesday.
US gold futures for April delivery rose 0.3 per cent to US$1,333.50 per ounce.
"Some dip-buying is coming back aggressively as the volatility index drops. Also, some good buying as the short-term US (interest) rate curve is easing off a bit," said Stephen Innes, APAC trading head for OANDA.
"(Prices are) well above major support and appetite is coming back, with longer-term traders still holding and steadily buying small clips from this morning Comex open."
Asian share markets were trying to find their footing on Wednesday as a semblance of calm returned to Wall Street where major indices bounced into the black after days of deep losses.
Distressed selling by leveraged funds seemed to have run its course at the moment, allowing volatility to slightly abate, though the prospect of monetary tightening across the globe remained a challenge for the long term, analysts said.
Unless the market plunge intensifies and damages the economy, US Federal Reserve policymakers is unlikely to budge from their plan to lift key short-term interest rates three times this year, some analysts said.
However, traders dialled back bets the US central bank would ratchet up the pace on rate increases on Monday to between two and three hikes from three to four hikes last week, according to interest rates futures.
Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.44 per cent to 829.27 tonnes on Tuesday from 841.35 tonnes on Monday.
Holdings saw their worst one-day fall since December 2016.
"Gold did not particularly perform well when stocks were melting down, while seeming to crumble rather effortlessly in the aftermath of Tuesday's sharp rally," INTL FCStone analyst Edward Meir said.
"This may tell us that the gold complex is more vulnerable to the downside at this stage, especially if the stock market stabilises."
Spot gold may test a support at US$1,316 per ounce, as suggested by a retracement analysis and a head-and-shoulders, according to Reuters technical analyst Wang Tao.
Spot silver climbed 0.8 per cent to US$16.77 per ounce.
Platinum gained 0.2 per cent to US$991.00 per ounce after touching its lowest since Jan 16 in the previous session.
Palladium edged 0.2 per cent higher to US$1,010.50 per ounce. In the previous session, it touched US$999.22 an ounce, its lowest since Dec 8.