Gold prices recouped some losses on Wednesday, May 16, on short-covering after prices fell to the lowest level this year in the previous session on surging U.S. bond yields and a stronger dollar.
Spot gold rose 0.3 percent to $1,294.30 per ounce at 0639 GMT, after shedding 1.7 percent and marking the lowest this year at $1,288.31 in the previous session.
This was also the lowest price level for the yellow metal since Dec. 28. U.S. gold futures for June delivery were up 0.3 percent at $1,293.60 per ounce.
“Rising U.S. bond yields and a stronger dollar were factors behind gold’s decline below the $1,300 level. The slight pick up suggests that there might have been some opportunistic buying on the part of investors,” said John Sharma, an economist with National Australia Bank.
A stronger dollar makes greenback-denominated gold more expensive for holders of other currencies, while rising U.S. yields tend to weigh on bullion’s non-yielding appeal.
While global political tensions continued to provide safe-haven support to the metal, investors said the main price drivers would likely remain a stronger dollar and rising U.S. interest rates.
“There are lot of geopolitical risks but people are just used to it. Therefore it has not become a big driver for gold,” said Helen Lau, analyst at Argonaut Securities.
Higher interest rates in the United States amid a rising dollar will continue to add downward pressure on gold, Lau said.
Spot gold may bounce to a resistance at $1,302 per ounce, before falling again, Reuters technical analyst Wang Tao said.
In other precious metals, silver was up 0.4 percent at $16.30 per ounce after falling about 1.6 percent on Tuesday in its biggest one-day percentage decline since April 23.
Platinum rose 0.4 percent to $897 an ounce, while palladium eased 0.1 percent to $981.72 an ounce after
recording the biggest single-day percentage loss in two weeks at 1.3 percent in the previous session.
