LONDON—Spot gold recovered from a selloff in Asia Thursday as the euro bounced from its low against the dollar and physical demand from India remained strong.
Traders said the market remained relatively quiet, as a mixed outlook is keeping gold to a narrow range between $1,090 and $1,100 a troy ounce.
Spot gold recently traded at 1,092.72/oz, up 0.5% on the day.
"We've seen pretty good physical demand from India," said a senior trader in London.
Lower prices are inducing jewelry buyers who have been on the sidelines back into the market, and this should accelerate during Chinese New Year in February, he said.
Investors returned to equity markets, as they reacted positively to U.S. President Obama's State of the Union address and a brighter economic outlook from the Federal Reserve. Asian and European equity markets were higher, though the euro struggled to hold above $1.40 against the dollar.
Although gold fell to a fresh one-month low in Asia Thursday, traders said it spent little time below $1,090/oz, reinforcing $1,090 as near-term support.
Resistance remains strong between $1,100/oz and $1,105/oz, said another London-based trader. "The selling up there seems to be big."
A prolonged period of range trading and consolidation for gold and other metals appears to be a likely scenario in coming weeks, given the contradictory signals for the global economy, currency markets and the dollar, traders said.
"I think they'll consolidate a bit lower," said the senior trader in London. "The signals are mixed, and in that scene we're unlikely to see a big move.
Platinum and palladium both found a steadier tone Thursday after heavy losses in the past week. Spot platinum was trading 0.9% higher at $1,514/oz, and spot palladium was up 2% at $419.50/oz.
