US gold futures seesawed early but turned higher by midmorning on Wednesday, following Tuesday's solid gains, as investors continued to take cues from the stock markets.
At 10:26 am EST (1526 GMT), most-active gold for April delivery on the COMEX division of the New York Mercantile Exchange was up $4.70 at $650.90 an ounce, after bottoming at $644.50. It hit a session high of $652. Leonard Kaplan, president at Prospector Asset Management, said that gold was almost exactly tracking the US stock market.
"The (futures) market is still a little shell-shocked over the last week or so, and volume is way down. It's fairly quiet," Kaplan said. US stocks opened flat on Wednesday as concerns about economic growth resurfaced and oil prices edged higher. Both The Dow Jones industrial average and the Standard & Poor's 500 Index inched up by midmorning.
Joseph Guzzardi at Sabin Commodities said the precious metals markets seemed a little mixed early on Wednesday with the crude oil up and the dollar weakened.
"If stocks go a little bit higher, we will travel with that," Guzzardi said.
Guzzardi said that both gold and silver markets were consolidating. He pegged support levels at $638 an ounce for gold, and $12.80 an ounce for silver futures.
On Monday, COMEX gold futures' open interest was reported at 388,841 lots, down about 26,000 lots, or 6 percent, from 415,555 contracts last Tuesday, prior to the sell-off. Kaplan said that the current open interest level remained very high, and that implied the gold market was vulnerable.
John Reade, an analyst at UBS, said in a daily note that the relatively small decline in open interest showed that there was more room for long liquidation. "It is worth noting that during the last two big corrections in gold in May and September last year the long liquidation lasted for 5 or 6 weeks, so it is premature to call a bottom in gold just yet," Reade said.
Spot gold was quoted at $648.70/9.70, compared with $646.00/7.00 late Tuesday. London's afternoon gold fix was at $646.40. In other precious metals, COMEX May silver was up 9 cents at $13.075 an ounce, after bottoming at $12.890. It peaked at $13.140. Spot silver was quoted at $12.96/3.01, compared with $12.91/2.96 late Tuesday. Silver was fixed in London at $12.890.
NYMEX April platinum was down $6.30 at $1,192.50 an ounce. Spot platinum was quoted at $1,188.00/93.00. June palladium edged up 10 cents to $352 an ounce. Spot palladium fetched $343.00/48.00.