After the biggest swoon in gold prices in more than a year and six consecutive days of losses, the market steadied.
Metal for immediate delivery climbed 0.4 percent to $1,273.86 an ounce at 12:39 p.m. in London after sliding 3.3 percent on Tuesday. Prices are down 7.4 percent since peaking in mid-July as expectations of tighter monetary policy in Europe and the U.S. dented the appeal of precious metals.
“The gold bull has been given a good scare,” Adam Finn, who oversees precious metals at Triland Metals and was short gold, said by phone from London. “It’s not dead yet. We could drop down to $1,172 and still see a medium-term continuation of the move higher.”
Some forecasters said it may get worse before it gets better. Prices will likely bottom at $1,257 an ounce, said Georgette Boele, a strategist at ABN Amro Bank NV in Amsterdam and last quarter’s second-most accurate gold forecaster tracked by Bloomberg.
Gold retreated on Tuesday following hawkish comments from Federal Reserve Bank of Cleveland President Loretta Mester and her counterpart from Richmond, Jeffrey Lacker. An informal consensus has built among European Central Bank policy makers in the past month that asset buying will have to be tapered once a decision is taken to end the program, the officials said, according to euro-zone central-bank officials.
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