NEW YORK (TheStreet) -- Gold prices have been reversing losses Wednesday morning amid a spate of physical buying, and as bargain hunters jump in to purchase the yellow metal after it hit three-month lows amid weak consumer confidence numbers that prompted a sell-off in equities, commodities and currencies.
Gold for August delivery was up $1.40 to $1,159.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,165 and as low as $1,157.40. The U.S. dollar index was down 1.7% at $113.51 while the euro was unchanged at $1.30 against the dollar. The spot gold price Wednesday was losing more than $1, according to Kitco's gold index.
According to a Reuters report, traders in India, the largest gold consumer in the world, are witnessing a pick up in gold as it became more affordable.
Adrian Ash of BullionVault.com writes in his morning note that while physical buying has provided gold with support, there is still downside risk for the yellow metal. Quoting Mitsui's London dealing desk, Ash writes: "Physical demand should support here, but with the third quarter largely absent of major gold buying holidays and festivals in physical centres [such as India], the risk remains to the downside."
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James Moore of the BullionDesk.com agrees that physical buying interest has provided gold with a boost, but "with gold having failed to hold the $1,166 level and with broader risk appetite continuing to rise gold may now look to challenge the 200 DMA of $1149.60."
A World Gold Council report indicates that the Council anticipates India gold demand will likely pick up towards the end of the summer and that there is evidence to suggest jewelery demand in China may have started to pick-up in July.
