Gold futures up more than 1% on strong physical demand

                    Gold futures rebounded from the previous day’s losses on Wednesday, gaining more than 1%, as prices remained supported by a rush in physical buying in the U.S. and Asia.

Gains were limited as investors remained hesitant to buy into the market amid a shaky technical outlook.

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On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,428.35 a troy ounce during European morning hours, up 1.4% on the day.

Comex gold prices rose by as much as 1.5% earlier in the session to hit a daily high of USD1,429.45 a troy ounce. Comex gold fell to a 27-month low of USD1,322.25 an ounce on April 16. 

Gold prices were likely to find support at USD1,322.25 a troy ounce, the low from April 16 and near-term resistance at USD1,440.10, the high from March 7, 2011.

Gold futures remained supported after the U.S. Mint said it temporarily suspended sales of its one-tenth ounce gold bullion coins after demand spiked following a 13% drop in prices in the two days through April 15. 

The Mint sold 85,000 of the one-tenth ounce coins in April, the second-strongest monthly total after January.

In total, the Mint has sold 175,000 troy ounces of gold coins so far in April, up almost three-fold from the 62,000 troy ounces the Mint had sold in all of March.

Buying interest also improved significantly in top consumers India and China, according to local bullion dealers.

Prices of the precious metal are now down almost 25% since hitting an all-time high of USD1,920.80 an ounce in September 2011, sparking fears that gold’s bull run is coming to an end.

Sentiment on the precious metal was dampened amid concerns the Federal Reserve will end its bond-buying program sooner-than-expected.

News that Cyprus was to sell some of its gold reserves to raise funds for its bailout also weighed on sentiment, as it sparked concerns other debt-ridden European governments would be forced to do the same.

Market analysts have warned that the precious metal is vulnerable to further selling as the technical outlook remained clouded.

Elsewhere on the Comex, silver for May delivery rose 1.7% to trade at USD23.12 a troy ounce, while copper for May delivery jumped 2% to trade at USD3.156 a pound. - Investing.com