Gold edged up in volatile trade on Friday, recovering from a 6-percent drop in New York, after a rebound in equities eased worries of a global recession.
A fall in the dollar against the euro restored gold's safe-haven appeal after a recent sell-off in equities drove speculators to sell bullion to cover losses. Firmer gold plucked other precious metals from their multi-year lows.
Gold was trading at $807.25 an ounce, up $2.75 from New York's notional close, having hit an intraday low of $795.25, not far from a one-month low of $783.80 hit on Thursday when funds dumped commodities amid uncertainties in the financial markets.
"Obviously, the price action is telling you that there are sellers. One of the factors causing gold to be sold is people are selling gold in order to get cash, the US dollar," said David Moore, commodities analyst at Commonwealth Bank of Australia.
"But I think they still create interest in gold as a safe-have investment as well. It's just a number of different forces play on the gold market at the moment."
Gold's volatility has scared off jewellers and some investors. It rallied to a two-month high of $931 last Friday on a weak dollar before tumbling all the way to $823.50 on the same day as investors sought cash to cover margin calls.
Gold was well below a record of $1,030.80 hit in March. Bargain hunting by private investors in Japan and buybacks by producers lifted gold prices, but jewellers were on the sidelines and the charts also indicated bullion could still hit the lows again, said Yukuji Sonoda, an analyst at Daiichi Commodities.
"In Japan, jewellery demand is tremendously poor. So many scraps have been returned to fabricators. We reached $750 last month, so it may be possible for us to touch that level again," he said. - Reuters
