By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures climbed Wednesday, reversing course as a dip near $1,532 an ounce on the heels of a stronger U.S. dollar lured buyers back into the market following sharp losses in the previous session.
“While gold and the U.S. dollar have an inverse relationship, that isn’t the case tick for tick,” said Vedant Mimani, lead portfolio manager of the Atyant Capital Global Opportunities Fund, a precious-metals-focused fund based in Miami.
“Gold around $1,525 brings in a lot of buying interest because that was the previous area of support,” he said.
Gold for August delivery GCQ2 +0.62% , which is the most-active contract, rose $5.90, or 0.4%, to trade at $1,556.90 an ounce on the Comex division of the New York Mercantile Exchange.
Earlier, prices, which fell more than $20 on Tuesday, touched an intraday low of $1,532.10.
Gold is seeing some strong technical moves as “buyers get interested around the $1,530-ish area, but sellers continue to hit the enter button around $1,555 — the battleground for prices that we expected,” said Richard Hastings, a macro strategist at Global Hunter Securities.
Despite all that, “there is enormous deflationary pressure building up globally from the flight to bonds overlayed by the relentless issuance of more and more debt,” he said. And “the deflationary wind is classic in its power to hurt commodities and precious metals.”
July silver prices SIN2 +0.68% also turned higher, up 6 cents, or 0.2%, to $27.86 an ounce.
The metals market had earlier seen broad losses along with most other commodities as the dollar climbed and the euro, pressured by growing concerns over Spain’s finances and contagion of debt woes in the region, fell to its lowest level against the dollar since July 2010.
Overall, “gold looks, feels and smells horribly exposed to the euro-zone debt crisis,” said Adrian Ash, head of research at BullionVault.
Egan-Jones Ratings Co. late Tuesday downgraded Spain’s debt to B from BB- with a negative outlook. Read more in Europe Markets.
The euro EURUSD -0.8140% fell to $1.2405, down from $1.2493 in North American trading late Tuesday, while the ICE dollar index DXY +0.38% , which measures the dollar against a basket of major rivals, rose to 82.852, up from 82.468 late Tuesday. Read more on currencies.
Strength in the greenback tends to pressure demand for dollar-denominated commodities such as gold.
Other metals declined, with platinum and copper leading the pack. July platinum PLN2 -2.04% shed $31.10, or 2.2%, to $1,397 an ounce and July copper HGN2 -2.28% lost 8 cents, or 2.4%, to $3.38 a pound.
September palladium fell 1%, or $6.20, to $599.85 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco.
