Gold jumped more than 2 percent on Monday after a rebound above $1,400 ignited technical buying, but sentiment was shaky as steady outflows from exchange-traded funds trimmed their bullion holdings to the lowest in three years. The technical outlook for gold, which has plunged more than 15 percent so far this year, is yet to improve although the safe-haven asset could find support from a rush in physical buying in Asia and other parts of the world.
"It remains to be seen which of these offsetting forces eventually wins out and exerts its influence over gold prices," said Edward Meir, metals analyst at futures brokerage INTL FCStone. Spot gold added $16.21 an ounce to $1,420.06 by 0631 GMT after rising as high as $1,427.20. It posted its biggest-ever daily loss in dollar terms last Monday, shocking veteran investors, who see gold as portfolio protection against inflation and other market risks. Prices sank to around $1,321 on April 16, its lowest in more than 2 years.
US gold futures, which often dictate the spot market, hit a high of 1,427.3 an ounce, up 2.3 percent from the previous close of 1,395.60. The June delivery later stood at $1,419.80, up $24.20. "The aggressiveness of the fall suggests that we are still in a consolidation rather in a reversal role. For me, the $1,435 level is likely to provide resistance," said Tim Riddell, head of ANZ Global Markets Research, Asia.