Gold bounces as euro rise spurs demand

Gold prices regained some ground yesterday as the euro bounced higher against the US dollar and bargain hunters resurfaced, but weakness in other commodities is likely to cap gains as investors cut exposure to risky assets.

Spot gold was at $1,106.45 an ounce, up $3.50 from New York's notional close on Tuesday, when safe-haven dollar jumped after US consumer confidence sagged to a 10-month low and ignited worries about demand for commodities.

Low volumes meant that bullion was prone to sharp movements, but dealers noted buying interest from jewellery makers in parts of Asia. Gold was around two per cent below a one-month high around $1,130 an ounce hit on Monday.

"It looks like there's some buying around these levels. But Bernanke has a speech for these two days, so nobody wants to commit too much," said Ronald Leung, Director of Lee Cheong Gold Dealers in Hong Kong.

Investors, who ditched gold in favour of the dollar after the release of poor US confidence data, shift their focus to Federal Reserve Chairman Ben Bernanke, whose testimony before the Congress yesterday and today may set the tone for the US currency.

 

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