Gold slightly higher after dipping to near 2-week low

Gold surged marginally on Wednesday, recovering from selling pressure in early trade that pushed bullion to a near two-week low, with investors using the opportunity to hunt for bargains even as improved risk appetite helped global equities rally.

Asian shares came within reach of testing their 2016 peak on Wednesday as prospects of solid U.S. growth and accommodative economic policy in major countries whet investors’ risk appetite damaged by uncertainty from Brexit.

In Britain, Theresa May, who will take over as prime minister on Wednesday, said she plans to set up a new government department to lead the process of withdrawing the country from the European Union.

Spot gold was up 0.7 percent at $1,341 per ounce by 0650 GMT after touching $1,327.30, its lowest since July 1.

Bullion fell 1.7 percent on Tuesday, its biggest one-day drop since May 24.

U.S. gold inched up 0.5 percent to $1,341.60 an ounce, after falling 1.6 percent in the previous session.

Whenever there is some short-term pressure, a range of $1,330 could be a very good entry point for people who have been bullish, but hesitant of chasing the prices, said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

“There was some selling in early trade, which seemed to be a bit of weak longs that were getting stopped on the break of the $1,330 level. Since then we have just been grounding back up,” said a Sydney-based trader, who did not want to be named.

“In the medium to longer term, the market will be pushed high, but I would not be surprised if there is further longer liquidation and maybe a push towards $1,300 in the next few sessions.”

Spot gold may drop to $1,308 per ounce, as it has pierced below a support at $1,334, according to Reuters technical analyst Wang Tao.

Despite better-than-expected U.S. non-farm payrolls data, the Federal Reserve should be in no rush to raise interest rates, two senior Fed officials said.

Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the U.S. dollar, in which it is priced.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.63 percent to 965.22 tonnes on Tuesday, its biggest one-day decline since Dec. 2, 2015.

Among other precious metals, palladium touched a more than 8-month high and was up 2.3 percent at $638.72.

Platinum, which fell for the first time in two weeks in the previous session, rose 0.7 percent to $1,094 an ounce.

Silver was up 1.3 percent at $20.38 an ounce.

Source: Reuters