Gold recovered from its lowest since late December on Wednesday, edging back into positive territory as U.S. stocks opened higher and after speculation Germany and France will act to keep Greece in the euro zone lifted the euro into the black.
Spot gold was up 0.3% at $1,549.04 an ounce at 1403 GMT, off a low of $1,527.00. The metal was earlier sucked into a broad-based financial market sell-off on the back of alarm over political turmoil in Greece.
Despite its recovery, it remains vulnerable to a further drop after its longest stretch of losses in nearly five months.
Gold fell along with other more industrial commodities such as copper and crude oil, under pressure from an early rise of the dollar, which put silver on track for its longest stretch of consecutive daily losses in nearly four years.
Fears a Greek exit from the euro zone would worsen the European debt crisis gripped European markets on Wednesday, sending shares and other riskier assets lower as investors shifted funds into safe havens like the U.S. dollar.
"Negative market sentiment seems well entrenched and we may see further downside in the price," BNP Paribas analyst Anne-Laure Tremblay said. "In particular, we could see further cross-asset liquidation if the probability of a Greek default increases in the next weeks."
Gold tends to trade inversely to the dollar, so that strength in the U.S. unit encourages non-U.S. investors to sell gold in exchange for greater profits in their own currencies. . .View Full Article