MW: Gold rebounds from near 2-week low on bargain hunting
SINGAPORE, Dec 2 (Reuters) - Gold reversed early losses on Tuesday as bargain hunters resurfaced after bullion posted its biggest daily percentage fall in almost eight weeks the previous day, but weaker oil and equities are likely to cap gains.
Platinum also bounced from a near two-week low and could find support around the current levels, with dealers expecting selling by speculators in Japan to subside because of the narrowing spread between the white metal and gold.
Gold was trading at $773.95 an ounce, up $3.35 from New York's notional close on Monday, when broad-based commodities Reuters/Jefferies CRB indexalso tumbled more than 3 percent, led by a 9 percent fall in crude oil.
Bullion hit an intraday low of $762.55, its weakest in nearly two weeks, in early trade on Tuesday before bouncing to track a firmer euro against the U.S. dollar.
"The increase in net long positions in New York could mean some people are increasingly bullish on gold. I guess we will now be looking at the $750 regions for support now," said a dealer in Singapore, referring to the 25-day moving average.
"The crisis in Thailand may have some impact on gold but it's going to be minimal. The focus seems to have shifted back to the gobal economy again," he said.
But falling equities markets could still force investors to sell bullion to cover losses amid signs of a deepening global economic downturn, which could cut investors' appetite for risky assets.
In a sign of how drastically the deepening economic gloom was curbing demand, U.S. manufacturing in November fell to its weakest in 26 years. A similar reading on euro zone factories sank to a record low. And the National Bureau of Economic Research, regarded as the arbiter of U.S. recessions, made official the economy had sunk into recession as early as December last year.
Speculative gold players in the non-commercial category boosted their net long positions to 81,872 on gold futures traded on COMEX at Nov. 25, up from 64,829 long lots at Nov. 18, Commodity Futures Trading Commission data showed.
Gold has regained some strength since hitting a 13-month low of $680.80 in October but was still well below a record of $1,030.80 in March. The political crisis in Thailand could spur safe-haven buying, although many jewellers were likely to stay away from the market as the year-end approached. A bomb blast killed an anti-government protester and wounded 22 at Bangkok's blockaded Don Muang airport on Tuesday, hours before the ruling in a vote fraud case that could deal a crippling blow to the government.
Oil extended fall and held near a 3-1/2-year low after OPEC's decision to delay any further output cut until mid-December.
Japan's Nikkei average slid 5 percent on Tuesday, while the euro edged up to $1.2624 after falling in New York as weak economic data heightened fears about a deep economic slowdown around the world.
Other precious metals tracked gold higher. Platinum bounced after posting its daily percentage drop since mid-September on Monday and dealers expected selling in Tokyo to slow down. Tokyo futures often set the tone for spot market.
"A sell-off in platinum futures due to global demand concerns has come to a halt now that the prices were down to the same level as gold futures, said Hitoshi Inagawa, senior manager at Yutaka Shoji Co.
"People prefered selling auto-related commodities, namely rubber, gasoline, platinum in the past several months. But today could be a turning point as one of the reasons to sell them aggressively is disappearing."
Platinum was trading at $814.00 an ounce, up $23.50 from New York notional close. The spread between platinum and gold dropped to less than $50, from more than $1,000 in March, when platinum also hit alifetime high of $2,290.
New York gold futures fell $1.0 an ounce to $775.8 in electronic trade.
