Gold turned higher on Wednesday as the dollar fell, US stocks dropped and a Federal Reserve president raised concerns about inflation expectations. US stocks sold off sharply and a brief rally in beaten-down oil prices stalled after US data added to concerns about an over supplied energy market.
Spot gold was up 0.6 percent at $1,093.25 an ounce at 3:40 pm EST (2040 GMT), while US gold futures settled up 0.2 percent at $1,087.10. "The downturn in equities helped push prices up in the latter part of trade," said James Steel, chief metals analyst for HSBC Securities in New York. Also late in the session, Chicago Federal Reserve Bank President Charles Evans said he was nervous about the potential effects of China's slowdown on the US economy and about the possibility that inflation expectations may be slipping.
"Evans was erring on the side of fewer, not more, rate rises and that's supportive of gold." Among other precious metals, palladium rose as much as 5.8 percent to $498 an ounce after sliding to a 5-1/2-year low of $449.55 on Tuesday. Silver gained 2.6 percent to $14.15 an ounce, while platinum was up 1.7 percent at $846.24.
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