Gold pared earlier losses to rise for a second day on Wednesday, building on Tuesday's gains, as investor concern over the US economic outlook prompted a late jump in the euro that lifted the precious complex. Spot gold was bid at $1,209.10 an ounce at 1455 GMT, against $1,210.65 late in New York on Tuesday, having earlier fallen to a session low of $1,205.75. US gold futures for August delivery rose $3.00 to $1,216.50.
A downgrade of Portugese debt by Moody's helped drive the gold price up by over 1 percent on Tuesday as it brought the concern over the euro zone debt crisis back into sharp focus and a weak reading of US retail sales hit investor confidence afresh in Wednesday's session.
"It is the quiet heartbeat of a market that is alive, but not exactly jumping about," said ANZ strategist Peter Hillyard. "You have got to be frightened to want to be long of gold, and we don't have that factor," said Credit Agricole analyst Robin Bhar. From a technical perspective, gold has established support just below $1,200 an ounce. Analysts who study charts of past price moves to determine the future direction of trade are cautiously optimistic its correction may be over.
"Intraday charts appear to be forming a small basing pattern, and the recovery through the $1,215/18 area suggests that the downtrend from the June peak has stabilised," said Barclays Capital in a note. Investor Marc Faber told Swiss business daily Handelszeitung gold offered an ideal way to preserve purchasing power at a time of heightened risk aversion.
"Perhaps the (gold) price will decline, but when other asset classes witness a steeper fall, then you are relatively well positioned. Therefore, gold should not be viewed as a commodity, but rather as a currency," the paper quoted Faber as saying. Among other precious metals, silver rose by over 1 percent to $18.42 an ounce, compared with $18.20.
The gold-silver ratio - how many ounces of silver are needed to buy an ounce of gold - hit a two-week low of 66.5 on Tuesday as silver outperformed gold in a rising market. Elsewhere platinum was at $1,528.50 an ounce against $1,524.50, while palladium was at $465.50 against $463.
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