Gold rose in choppy trade on Wednesday as sharp losses in equities and other commodities spurred safe-haven demand, while technical buying also provided a boost. US futures posted above-average turnover for a second straight day after having risen to a record in the previous session, which included trading volume logged during Monday's US holiday.
The metal turned higher after a price rebound off key technical support at $1,530 an ounce triggered heavy buy stop-orders. Bullion fell more than 1 percent earlier in the session as spiralling fears over the euro zone caused a selloff in the euro, equities and commodities. Other perceived safer investments such as US Treasuries and German bunds rose sharply.
"Gold did function as a flight-to-safety vehicle, but only to a small degree and we can very easily test those lows again tomorrow or the next day," said Bill O'Neill, partner at commodities wealth manager LOGIC Advisors. "There was still not much vitality and we still don't see any speculative fervour," O'Neill said. The price of gold has lost 6 percent in May, its worst monthly performance since December, when it fell nearly 11 percent.
Investors have shunned the metal out of disappointment over a lack of economic stimulus from central banks. Spot gold was up 0.6 percent at $1,563.70 an ounce by 12:22 pm EDT (1622 GMT), having hit a two-week low of $1,531.49. US COMEX gold futures for June delivery were up $14.20 an ounce at $1,562.90 in above-normal volume.
Tuesday's COMEX trading volume hit an all-time high at 484,721 lots, surpassing the previous record of 483,429 lots registered on August 24, 2011. However, Tuesday's turnover included Globex electronic trading volume between Sunday evening and the US Memorial Day holiday on Monday. Tuesday's figure was also inflated by active position rolling from the June to August contracts before the June delivery period.