Gold reversed early losses on Wednesday to trade steady as the U.S. dollar slid against other currencies in the face of mounting negative economic signs. In light trading ahead of Christmas, spot gold was fetching $838.65 an ounce at 0524 GMT versus $838.55 late in New York as declines in the greenback against the euro and yen enticed investors, dealers said. The dollar slipped against the yen, pressured by selling from Japanese exporters a day after dismal U.S. growth and housing data suggested a prolonged recession ahead, prodding more buyers into bullion, dealers said. Data on Tuesday showed the U.S. economy contracted 0.5 percent in the third quarter and existing home sales fell by a record amount last week as the recession picked up pace. The euro rose 0.3 percent against the dollar to $1.3960. "Gold prices should ease on mild profit taking, although a sharp move in the U.S. dollar will dictate sentiment," Australia & New Zealand Bank chief commodities strategist Mark Pervan said in a client note. Gold initially added to overnight declines as the dollar strengthened against most major currencies in holiday-thinned trade, prompting investors to cash in on year-end profits after a recent rally. A modest 0.13 percent rise in oil to $39.03 a barrel held little sway over the direction of bullion. COMEX gold futures for February rose 0.16 percent to $839.40 per ounce in after-hours trade after losing $9.10 or 1.07 percent on Tuesday. Following a return to trading after a holiday on Tuesday, the benchmark December gold contract on the Tokyo Commodity Exchange fell 16 yen to 2,438 yen. The previous key contract for October was down 13 yen at 2,437 yen, Reuters data showed. Spot platinum dropped $5 to $837.00 an ounce. Spot palladium was unchanged rose $1 to $171.00 an ounce, while silver recouped some of Tuesday's hefty losses to trade 7 cents higher at $10.29.

Source