US gold futures bounced from previous one-month lows early on Wednesday, as trade buying, short covering and high energy prices all provided a floor after Tuesday's sharp speculative sell-off in precious metals.
"It ran out of steam at $433 an ounce yesterday, and there was trade buying around," said a COMEX floor trader.
"I don't think the trade wanted to be short with the New Orleans disaster happening, so they covered short positions after the fund selling."
Gold extended gains by midmorning as the dollar fell on a report showing business conditions in the US Midwest were much softer than expected. The Chicago Purchasing Management Index in August contracted to 49.2 from 63.5 in July, December delivery gold was up $2.40 at $437.90 an ounce by 10:25 am EDT on the New York Mercantile Exchange's COMEX division, in a session range of $435.30 to $438.20.
Tuesday's nadir at $433.50 was the lowest for New York gold futures since July 29, after stop-loss selling plowed through support levels at $440 and $438.40.
Chartists put resistance in COMEX December gold at $441.90 and support at $433.50 and $432-430. Estimated COMEX turnover was a mild 14,000 lots at 10 am.
Spot gold traded at $433.50/434.30 an ounce, up from New York's late quote on Tuesday of $431.00/1.80. The afternoon fix in London reached $433.25. Silver rose from previous six-month lows hit both in futures and bullion as gold ticked higher Wednesday.
COMEX December silver climbed 9.0 cents to $6.855 an ounce, dealing from $6.76 to $6.86. Wednesday is first notice day for the September metal delivery period.
Spot silver fetched $6.77/6.80, up from Tuesday's New York close at $6.68/71. It was fixed at $6.74.
In NYMEX trade, October platinum rose $2 to $891 an ounce. Spot platinum was quoted at $887/891. December palladium gained 50 cents to $183.75. Spot was stable at $182/185.