Gold slipped on Wednesday on uncertainty over whether the US Federal Reserve would begin curbing its commodities-friendly economic stimulus from next month.
Investor sentiment towards the precious metal, however, seems to be more positive now than earlier this year as many believe the worst is over and have begun injecting money again into gold-backed funds.
Bullion has lost nearly a fifth of its value this year on stimulus worries and outflows from exchange traded funds (ETFs). It fell to a three-year low of $1,180.71 an ounce in June but has since recovered about $200.
Spot gold fell 0.2 percent to $1,367.35 by 0701 GMT, but was still near two-month highs.
“Our clients are tempted to add more exposure to gold,” said Helen Lau, senior analyst for China’s commodities sector at UOB-Kay Hian. “It’s because of the recent gold price increase, US dollar weakness and strong consumer demand in China.”
“Certainly they are not bearish on gold any more. We now think the downside pressure (on gold prices) is very limited.”
Several brokerages, including Goldman Sachs, have cut their price outlook for gold since the beginning of the year.
