Gold rebounded in volatile trade on Wednesday, jumping above $1,900 after its steepest sell-off in seven years, as data showed Britain’s economy shrank by a record 20.4% between April and June, fuelling coronavirus-led slowdown fears.
Spot gold, which had its steepest sell-off in more than seven years on Tuesday, gained as much as 2% and by 0943 GMT rose 0.9% to $1,929.09 per ounce, erasing sharp losses from earlier in the Asian session.
U.S. gold futures fell 0.3% to $1,941.50 per ounce, while silver also rose, gaining 3.3% to $25.61 per ounce, after slumping 15% on Tuesday.
“Gold is bouncing back very strongly. Sentiment has not been damaged and by extension, you could argue that it’s created an opportunity for those who maybe missed the boat on the rally to get in again,” independent analyst Ross Norman said.
Gold’s gains were also helped by the dollar, whose recent uptick was stalled by a deadlock in Washington over a stimulus package.
“The froth has been blown off the top of the gold market, and now fundamental price discovery is going on,” IG Markets analyst Kyle Rodda said.
Bullion has gained 27.2% so far this year, as investors buy it as a hedge amid fears of currency debasement, with central banks flooding the economy with money to ease the damage from the global coronavirus crisis.
“There could be some consolidation in the near term, but the fundamental drivers pushing the metal higher remain intact.” said FXTM analyst Lukman Otunuga.
Platinum rose 0.7% to $936.61 per ounce, while palladium rose 2.3% to $2,139.63 per ounce.
Interactive graphic Tracking the spread of the novel coronavirus https://tmsnrt.rs/3aIRuz7
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