London: Gold recovered on Tuesday as the market consolidated after heavy selling the previous day and as panic over Western world debt subsided in the wider financial markets, lessening the need to sell gold to raise dollar funding.
But the respite was seen as temporary, with investors rattled by the continuing stress on euro zone debt markets, and also by the apparent inability of US officials to reduce debt by forging a plan to cut $1.2 trillion from the budget.
Spot gold gained 0.9% to trade at $1,693.60 an ounce by 1432 GMT, off the four-week low of $1,665.88 hit on Monday. The precious metal has lost nearly 5% over this week and last.
US gold also rose 0.92% to $1,693.90.
“The gold price is a little bit oversold, so today’s seen a bit of consolidation,” said Jesper Dannesboe, senior commodity strategist at Societe Generale.
But he added: “I wouldn’t be too confident it’s going to rally short term because risk aversion is at very high levels, and when risk aversion is extremely high, gold tends to fall.”
In other precious metals traded, spot silver rose 0.35% to $31.75 an ounce, recovering from a one-month low of $30.63 hit in the previous session.
Spot platinum rose 0.34% to $1,551.99 an ounce, while spot palladium fell 0.23% to $583.38 an ounce.