Gold edged higher on Thursday as investors looked for bargains
Gold edged higher on Thursday as investors looked for bargains after a sharp drop in the previous session, but it stayed below the key level of $1,400 an ounce as upbeat U.S. data dented its appeal as an alternative investment.
Robust U.S. auto sales numbers reinforced expectations the U.S. Federal Reserve would start to cut back its stimulus later this month. The central bank's three quantitative easing schemes have buoyed prices of bullion and other commodities.
Gold had risen $1.79 to $1,392.63 an ounce by 0336 GMT, after falling 1.5 percent on Wednesday. It rallied to its highest in more than three months around $1,433 in late August on safe-having buying as the United States and its allies looked set to launch military strikes on Syria.
"If we break through the critical support level of $1,380, prices will go all the way down to at least $1,353. For now, they are many issues surrounding gold which are offsetting each other," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
"I think the most prominent issue is the U.S. Federal Reserve meeting. The economy seems to be expanding - that provides the ground for them to taper the stimulus."
U.S. gold was up $2.90 at $1,392.90 an ounce.
Gold buyers lined up to restart imports on Wednesday as the customs department clarified new rules, putting the world's biggest consumer back in the market after a six-week gap and threatening government efforts to underpin the rupee.
But there have not yet been any fresh enquiries from India, even though the rupee has bounced from all time lows, said physical dealers.
Premiums for gold bars in Hong Kong edged down to $2 an ounce to spot London prices from $2.50 in late August.
"The thing is that the import tax is still high in India, so I think that is dampening their buying interest. Also gold prices are still high at close to $1,400," said a dealer in Hong Kong.
Gold is one of the biggest items in a record current account deficit that has helped push the rupee to an all-time low. New Delhi has raised the import duty on gold to an all-time high of 10 percent.
Elsewhere, stocks in Asia edged up on Thursday following a positive lead from Wall street.