NEW YORK--Gold futures rebounded from a seven-week low on stronger demand for physical bullion from price-conscious buyers in India, the world's largest gold importer, while other investors cashed in their bets on lower prices.
The most actively traded contract, for December delivery, was recently up $14.50, or 0.9%, at $1,716.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold futures sank to their lowest level in seven weeks Wednesday, as investors worried that the Federal Reserve could adjust its easy-money policy in a statement that was to be released after Comex floor trading had closed for the day.
Instead, the central bank stuck to its guns, reiterating its stance on keeping interest rates near zero until mid-2015 and keeping stimulus in place to bolster economic growth, while acknowledging that some recent data had improved.
Some investors who wagered on gold's declines returned to the market as buyers in order to close out their bets and lock in profits, said George Gero, senior vice president with RBC Capital Markets Global Futures.
Gold's declines lured India's jewelers in to the market as buyers. India's gold demand has been under pressure from record-high domestic prices as the Indian rupee weakened against the dollar. Gold is traded in dollars, and becomes more expensive for buyers who use other currencies when their currency weakens against the dollar.
The lackluster pace of Indian gold buying has been a concern because the Hindu festival season, traditionally a time of gold gift-giving, runs from September to November.
"There was a heavy rush to buy jewelry yesterday due to Dussehra," said Kumar Jain, vice president of Mumbai Jewellers Association.
Gold demand has now almost doubled compared to sales in the July-August period, though it was still trailing last year's volumes, he said.
Indian buyers are critical to the global gold market as they account for the second-largest segment of demand after China, the world's largest gold producer and consumer. Most of India's gold, however, is imported.
-Debiprasad Nayak contributed to this article
Write to Tatyana Shumsky at tatyana.shumsky@dowjones.com
