Gold climbed above $940 on Wednesday, bouncing back from a sell-off the previous day, as the dollar slid against the euro and higher crude prices boosted the metal's appeal as a potential hedge against inflation. Spot gold rose as high as $941.80 to trade at $937.30 by 1541 GMT, up from $925.85 quoted late in New York. It fell to $922.60 per ounce on Tuesday, its lowest since June 24.
The precious metal jumped almost $10 after the dollar/euro exchange rate turned sharply in favour of the euro. Analysts said long-term inflation expectations were boosting gold's appeal and further data reinforcing those views would help the metal to build on its gains.
David Wilson, analyst at Societe Generale, said buyers of physical gold were slowly wading back into the market, while flows of scrap gold were showing signs of stabilisation. US gold futures for August delivery were at $939.4 an ounce, up more than one percent from the previous settlement on the COMEX division of the New York Mercantile Exchange.
Holdings by the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, fell again on Tuesday by 5.19 to 1,120.55 tonnes as of June 30. The holdings are down 13.48 tonnes from a record high on June 1. SPDR holdings have declined in the past few weeks as a sense of optimism about the global economy sapped investors' appetite for bullion as a safe-haven asset.
In other precious metals, spot silver rose to $13.68 per troy ounce against $13.57 in New York, while platinum gained to $1,194.50 versus $1,172.50 previously and palladium climbed to $252.00 from $248.00. Andrey Kryuchenkov, analyst at VTB Capital, said industrial metals such as silver could rise as the macro-economic picture improved, while platinum holders were paying close attention to US car sales data.
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