Gold pulls back but holds above $1,600

SAN FRANCISCO — Gold futures pulled back on Wednesday, holding above $1,600 an ounce, with investors taking a breather a day after pushing the precious metal to its biggest one-day gain so far this year.

Gold for delivery in April GCJ3 -0.71% fell $12.60, or 0.8%, to $1,602.90 an ounce on the Comex division of the New York Mercantile Exchange.

The metal on Tuesday rose $28.90, or 1.8%, to settle at $1,615.50 an ounce, vaulting over the $1,600-an-ounce mark.

That was gold’s biggest one-day gain in 2013 and came as investors turned to the metal for its safe-haven appeal following an election that resulted in a political gridlock in Italy.

“The European Union and its sovereign debt problems are still simmering on the front burner of the market place,” said Jim Wyckoff, senior analyst at Kitco.com, in a note Wednesday. “The Italian elections failed to show a clear winner as voters ostensibly rebuked present government austerity measures.”

In addition, comments Tuesday from U.S. Federal Reserve Chairman Ben Bernanke reassured investors that the central bank wasn’t about to pull back on its asset-buying program. Fed bond-buying has previously supported gold.
Bernanke was set to speak to the House of Representatives Wednesday. Follow live blog of Bernanke’s second day of testimony.

Meanwhile, the U.S. government’s “likely inability to agree on a taxing and spending plan by the March 1 sequestration deadline is added to a nervous and uncertain atmosphere in the world market place this week,” said Wyckoff. “That’s also a mildly supportive factor for the safe-haven investment assets this week.”

Prices Wednesday had briefly pared losses, with gold finding some safe-haven support immediately after news that bookings for big-ticket U.S. good slumped in January because of weaker demand for aircraft. 

Gold prices have already tallied a gain of nearly $43, or 2.7%, on Monday and Tuesday.

Fawad Razaqzada, a technical analyst at GFT Markets, expressed doubt about gold’s ability to put in sustained gains.

Click to Play

Apple takes on Samsung in India

Apple Inc. has overhauled its iPhone operations in India, attempting to break Samsung Electronics Co.'s grip on the country’s market.

“Although the bounce was long overdue, it is unclear at this stage how long this will last, particularly as the medium term bearish trend remains intact,” the analyst said.

“Gold could run into a fresh wave of selling pressure around $1,625, where the 50% retracement of the last downswing meets an old support level. It is a similar story for silver, which faces resistance around $29.60,” the analyst said.

Silver for delivery in May SIK3 -0.72%shed 23 cents, or 0.8%, to $29.10 an ounce.

Other metals sagged. May copper HGK3 -0.38% fell 1 cent, or 0.3%, to $3.57 a pound.

Palladium for delivery in June PAM3 +0.80% lost 20 cents to $741.70 an ounce, while platinum for April delivery PLJ3 +0.26% fell $10.20, or 0.6%, to $1,606.30 an ounce.(MarketWatch)