Traders are awaiting a spate of US and European economic data due out later in the day for its impact on the currency markets, and consequently on gold.
The US will also release its weekly oil inventory report, which could impact crude.
Gold rose to US$830.20/831.20 an ounce at 08:40 GMT from $822.90/824.30 an ounce late in New York on Tuesday.
“The euro has gained back some value, and it seems the dollar may have been a little overbought Wednesday - that is why gold has gained,” said Afshin Nabavi, head of trading at MKS Finance in Switzerland.
“We have (US July) durable goods orders coming out of the States later today, and the oil inventories as well, so it is going to be a busy and volatile afternoon,” he added.
The dollar slipped against the euro on Wednesday, giving up more of the gains that took it to a six-month high against the single currency on Tuesday.
A weaker dollar typically benefits gold, which is often bought as a hedge against weakness in the US currency.
In the longer term, global economic deterioration is expected to support the dollar, as the Federal Reserve is likely to hold rates while other key central banks are expected to cut.
This should keep a lid on gains in gold, analysts said.
Oil rose as fears grew tropical storm Gustav could affect US oil operations in the Gulf of Mexico.
Gold tends to track crude prices higher, as the precious metal can be bought as a hedge against oil-led inflation.
Traders will be closely eyeing key US oil stockpile data due for release at 14:35 GMT for its effects on the crude market.
However, it is the dollar-euro exchange rate that is most likely to dictate trade on Wednesday, brokers said.
“Although oil prices should remain supported by concerns over storm Gustav today, the greenback’s movement against the euro could take centre stage and set the tone for the commodity complex,” said Standard Bank analyst Manqoba Madinane.
“Precious metal prices could come under pressure today as investors watch for a correction to the upside for the greenback against the euro.”
Gold price of the Saigon Jewelry Company, Vietnam’s biggest gold trader, Wednesday remained volatile, rising VND170,000 to VND17.46 million per tael, or 1.2 ounce.
Source: Reuters |
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