Gold gains, but clouds hover over short-term outlook

London (July 23)   Gold prices edged higher Wednesday, a slight recovery from losses in the previous session when investors sought to take on risk in equities.

Gold for August  GCQ4 +0.12%    rose $2.20, or 0.2%, to $1,308.50 an ounce.

The August contract dropped nearly $8 on Tuesday as the appeal of safe havens weakened and stocks strengthened on better-than-expected inflation and housing data, and quarterly earnings reports that have mostly come in above expectations. The S&P 500 index  SPX +0.50%    on Tuesday closed just shy of its record closing high.

Gold only holds “slight upside potential” in the short term, wrote commodities analysts at Commerzbank on Wednesday. They noted that dollar-denominated gold was weighed by gains in the dollar  EURUSD +0.03%    against the euro Tuesday as the U.S annual. inflation rate remained at 2.1%.

As well, Commerzbank said Chinese gold demand is continuing to falter, and the precious metal is also likely to receive “virtually no support from Indian demand, for Indian Finance Minister Arun Jaitley [on Tuesday] dashed any last hopes that the gold import restrictions might be eased in the near future.”

Elsewhere in metals trading, September silver  SIU4 +0.03%    picked up 1 cent at $21.02 an ounce. October platinum  PLV4 -0.14%   fell 30 cents to $1,488 an ounce, while September palladium  PAU4 -0.17%   gave up $1.45, or 0.2%, to $873.40 an ounce.

High-grade copper for September delivery  HGU4 +0.13%    shed a penny to $3.20 a pound.

Source: MarketWatch