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By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 2 (Reuters) - Gold rebounded sharply
on Wednesday as a crude rally and U.S. Federal Reserve Chairman
Ben Bernanke's comments about a possible U.S. recession
encouraged bargain hunters and investors to snap up bullion.
Bernanke said on Wednesday in his testimony to Congress
that the U.S. economy could face a mild recession but that
growth should pick up as the impact of aggressive interest
rates cuts is felt. []
Gold <XAU=> hit a high of $898.60 and was at $898.00/898.80
by New York's last quote at 2:15 p.m. EDT (1815 GMT), against
$884.20/885.40 in New York late on Tuesday, when it had traded
as low as $872.90.
A decline of 3 percent on Tuesday took overall losses to 15
percent since gold hit a record high of $1,030.80 last month,
making bullion attractive for physical dealers.
Gold initially traded lower as the dollar rose after a
positive private-sector ADP jobs survey and
better-than-expected U.S. factory orders.
Bill O'Neill, managing partner of LOGIC Advisors in Upper
Saddle River, New Jersey, said that further weakness in the
dollar should propel gold higher.
"I think gold will pick up again because I don't think the
dollar is going to be capable of staging a consistent rally
here. So I think that's going to help stabilize gold," O'Neill
said.
Gold often moves in the opposite direction of the dollar.
MARKET OUTLOOK
Analysts were positive about gold's outlook.
"Gold is looking decent here. I'm not convinced the worst
is over for either the credit market crisis or the U.S.
economic slowdown," said David Thurtell, metals analyst at BNP
Paribas.
"U.S. jobs data will be crucial for the market. Poor
numbers would see renewed U.S. dollar weakness and gold may
push back over $920," he said.
The U.S. non-farm payroll data due on Friday could set the
tone for gold's near-term direction.
"A figure much higher than expected could see the dollar
extending its recent gains against the euro. However, if it
appears that the U.S. is still struggling to create jobs, it
could lead to renewed dollar weakness on the back of
expectations of further aggressive Fed rate cuts," the bank
said.
In other precious metals markets, U.S. gold futures for
June delivery <GCM8> on the COMEX division of the New York
Mercantile Exchange settled up $12.40, or 1.4 percent, at
$900.20 an ounce.
Spot platinum <XPT=> rose 1.6 percent to a high of $1,948
an ounce and was last at $1,942/1,952, still up from
$1,918/1,928 on Tuesday, when it had touched a low of $1,888.
Platinum has fallen more than 15 percent since hitting a
record high of $2,290 on March 4 on production problems in
South Africa, the world's top producer of the metal, following
an electricity supply crisis.
State power utility Eskom said on Wednesday that South
Africa's power crisis may last many years unless there was a
sustained drop in electricity demand in the country.
Silver <XAG=> rose to $17.17/17.22 an ounce from its
previous finish of $16.81/16.86 on Tuesday, when it hit a
two-month low of $16.32. Palladium <XPD=> climbed $1 to
$436/451 an ounce from its U.S. close on Tuesday.
(Editing by Christian Wiessner)
