Gold rises on short-covering after falling to 4-month low
Spot gold was 0.2 percent higher at $1,292.51, having gone as low as $1,286.20, its weakest since Dec. 27. U.S. gold futures for June delivery settled up $1.20, or 0.1 percent, at $1,291.50 per ounce.
"A lot of people are trying to cover shorts from the break at the $1,316 level. That was a good area people were betting for the downside," Michael Matousek, head trader at U.S. Global Investors. "Now you want to start taking some profits, because statistically, it looks like it can bounce from the short-term."
Gold prices barely responded to North Korea saying it might not attend the unprecedented June 12 summit with the United States if Washington continues to insist that it unilaterally give up its nuclear weapons. North Korea also called off high-level talks with South Korea scheduled for Wednesday, blaming U.S.-South Korean military exercises.
Bullion had suffered its biggest single-day loss since November 2016 when it fell 1.7 percent on Tuesday to below the 200-day moving average and the psychologically significant $1,300-an-ounce level.
Gold is likely to fall to $1,275 by the end of June and $1,250 by the end of the year as U.S. yields and the dollar strengthen, said ABN AMRO analyst Georgette Boele. That is below the $1,310-$1,360 range gold has inhabited since January. "It held up for so long on such a high level. Now you are below $1,300 and the 200-day moving average; people who hold long positions are a little bit nervous," she said.
Technical and momentum indicators suggested that gold could fall to about $1,278, ScotiaMocatta analysts said. Fibonacci support for the metal was at $1,287, they added.