Gold rebounds but outlook clouded by lower investment

Thursday, 25 April 2013 01:09 - - {{hitsCtrl.values.hits}}

Reuters: Gold rose on Wednesday as solid physical demand encouraged speculative buying after the previous session’s drop, while support also came from weak German economic data, which fanned speculation the European Central Bank could cut interest rates.

Investor confidence is still reeling after bullion’s spectacular fall and outflows from exchange-traded funds show no signs of abating, although demand for gold bars and coins surged after prices plunged to their weakest in over two years on April 16.

Spot gold rose 0.7% to $1,421.81 an ounce by 0952 GMT, after falling for the first time in six session on Tuesday. Gold sank a combined $225 on April 12 and 15 in a sell-off that surprised ardent gold investors and bulls.

U.S. gold futures for June delivery were up 0.9% to $1,422.30.

Cash gold has dropped about 15% this year. It is torn between a rise in demand for jewellery and coins, and investors in exchange-traded funds cutting exposure to it on worries about central bank sales and prospects of an end to inflationary monetary policy in the United States.