Gold futures on the COMEX Division of the New York Mercantile Exchange bounced off weak sentiment on Wednesday, as inflationary concerns intensified amid rally in energy and grain prices, boosting the appeal of gold as a hedge against inflation.
The most active gold contract for June delivery hiked 15.8 U.S. dollars, or one percent, to 1,495.8 dollars per ounce.
Market analysts said that rallies in the oil price as well as corn and wheat futures has brought back fears of inflation, which prompted investors to repurchase gold as a hedge against inflation.
The New York crude oil futures gained more than three dollars on Wednesday to top 100 dollars per barrel. Meanwhile, Chicago grains extended rally with wheat even hiking 53 cents to stand above eight dollars a bushel. The Thomson Reuters/Jefferies CRB Index of 19 raw materials gained as much as 2.6 percent.
Moreover, the weakness in U.S. dollar also helped to buoy up gold market. The dollar index, which compares the U.S. unit to a basket of six currencies, fell to 75.289 from 75.441 on late Tuesday.
Besides, a trader noted that there are still a lot of strong demands for commodities, "anytime you see a pullback, people will come in and buy gold to hedge against inflation and diversify away from the dollar."
Before Wednesday, gold has suffered three straight drops due to strengthened dollar and widespread selloff among investors.
Silver for July delivery also went up 1.606 dollars, or 4.8 percent, to 35.097 dollars per ounce. Meanwhile, platinum for July delivery added 18.9 dollar, or one percent, to 1,779.9 dollars per ounce.
