Gold Price Edges Up in Technical Rebound

Gold prices rose on Tuesday in a technical rebound and a round of short-covering after dropping 6% over three days.
A recent rally in stocks has revived investor risk appetite and driven money out of safe-haven gold, while a drop below key technical levels around $880 and $870 per ounce pushed bullion down to a ten-week low of $864.30 on Monday.
On Tuesday, gold climbed 1% to as high as $877.60 per ounce, and was at $876.35 by 05.30 GMT, up nearly 0.9% from New York's notional close of $868.80.
Bullion fell on Monday as some investors unwound safe-haven positions while others sold as the dollar strengthened. Some investors were also unloading gold along with other commodities including oil and base metals.
"We have three straight days of losses, and gold should get a bit of a bounce, and I guess we are looking at it now," said Adrian Koh, an analyst at Phillip Futures, adding that $860 should provide near-term support.
Gold prices are still down about 13% from an 11-month high above $1,000 hit in February.
Falling bullion prices prompted India to buy some gold, raising hopes the world's largest consumer could be looking for more during the wedding season, dealers said.
Though some traders said gold may have been oversold, the metal remains vulnerable to any signs of investors shifting money into other assets.
"We are seeing short-covering today, but we might test $850 as equities are starting to become more attractive, and there is some shift of risk appetite," said a Sydney-based trader.
Japan's Nikkei stock average inched down 0.3% on Tuesday as the yen crawled back against the dollar, erasing earlier gains. US stocks broke a four-day rising streak on Monday.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,127.37t as of 6 April, unchanged from 3 April and just below a record 1,127.44t.
Exchange-traded funds (ETFs), which back up the securities they issue with physical commodities, are a major element of demand.
"With ETFs holding steady and Asian demand from India and China emerging when prices dip, the market looks to be seeing a temporary downward bias and traders eyeing where the floor is, rather than chasing prices lower," said Shuji Sugata, a manager in Mitsubishi Corp Futures and Securities' research team.