By Virginia Harrison and Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Gold futures traded higher on Thursday, as recent sharp losses attracted bargain hunters and the dollar index fell.
Gold for April delivery GCJ2 +0.32% added $6.10, or 0.4%, to $1,649 an ounce in electronic trade, but failed to recoup the sharp losses suffered in Wednesday’s session when reduced hopes of monetary stimulus dulled demand for the metal.
The metal sank 3% in the North American session on Wednesday — hitting its lowest settlement in more than eight weeks — as investors continued to react to the declining likelihood of more easing measures by the Federal Reserve. Read more on Wednesday's sharp drop for gold.
“As the price falls below important support levels, we may see further selling on the part of money managers. We regard this development as positive for the gold price in the medium term, because the exit of “weak hands” paves the way for the next price rise,” said analysts at Commerzbank in a note.
William Adams, head of research at metals-data provider FastMarkets, said that “there is a risk of further weakness, but equally we would not be surprised if bargain hunters start to provide support and if prices start to move higher, then follow-through buying may well follow.”
Gold prices were also buoyed by a weaker dollar, as the ICE Dollar index DXY -0.20% , which measures the greenback’s performance against a basket of six other currencies, shed 0.2% to 80.377. A decline in the dollar makes dollar-denominated commodities such as oil and gold more attractive for holders of other currencies.
Investors are awaiting data on initial jobless claims from the U.S. and the Empire State and Philadelphia Fed’s manufacturing sectors.
“Overall, we feel the path of least resistance is sideways as the market weaves its way between robust U.S. demand, lackluster EU [European Union] demand and slower growth in China. As such, the markets are likely to be sensitive to today’s economic data,” Adams said.
The broader metals complex mostly strengthened during European trading hours, after trading mostly lower during Asian hours.
April platinum futures PLJ2 +0.28% gained $6.60, or 0.4%, to $1,679.70 an ounce. Silver for May delivery SIK2 +0.57% added 22 cents, or 0.8%, to $32.44 an ounce.
May copper HGK2 +0.46% took on 2 cents, or 0.4%, to $3.86 a pound.
Palladium ticked higher, with the June contract PAM2 +0.24% adding $1.1, or 0.2%, to $698.55 an ounce.
Virginia Harrison is a MarketWatch reporter based in Sydney.
Sara Sjolin is a MarketWatch reporter, based in London.
