Gold rose on Wednesday as sharp losses in US equities and a drop in the US dollar prompted the metal to rebound from the previous session's three-week low. After earlier rangebound trade with no major US economic data, bullion extended gains in late morning trade as the S&P 500 index fell almost 1 percent on persistent worries over how soon central banks will begin to scale back supportive measures.
"It's a sign that the worst of the money outflows in the gold market is over. We are still not out of the woods but at least it shows that the gloom-and-doom forecast of $1,000 gold is unrealistic for now," said Bill O'Neill, partner at commodities investment firm LOGIC Advisors. Spot gold was up 0.6 percent at $1,387.36 an ounce by 2:46 pm EDT (1846 GMT). US Comex gold futures for August delivery settled up $15 an ounce to $1,392.
Turnover was low with trading volume at under 120,000 lots, sharply below its 30-day average of 220,000, preliminary Reuters data showed. Among other precious metals, silver was up 0.6 percent at $21.73 an ounce. Platinum dropped 0.4 percent to $1,474.24 an ounce, while palladium rose 0.5 percent to $753.22 an ounce.
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