Gold back on a roll

Reuters, London

Gold struck its firmest level in three sessions on Wednesday, chalking up gains after a funds-led selling rout last week floored the precious metal to its weakest level in more than three months.

Spot gold hit a high of US$305.90 a troy ounce, its firmest level since last Friday and up from $304.10/304.60 at the close in the previous New York session.

The claw-back represented a 1.5 percent recovery from last week's low of $301.50 an ounce when gold was battered by the biggest weekly sell-off seen in nearly nine years.

But despite the gains, the outlook for the metal remained difficult, analysts said.

Last week's fund sell-off punctured gold's bull run this year which at its peak in June saw the traditional safe-haven asset soar to $330.30 an ounce, its highest level in more than 2-1/2 years.

It also brought to a quick halt a rally which had taken the metal 20 percent higher since the start of the year.

By 10.01 GMT (5.01 p.m. Jakarta time), gold was quoted at $305.40/305.90 an ounce, supported by gains in gold mining equities.

The Johannesburg bourse's leading index of gold mining shares gained more than three percent while the benchmark Philadelphia Stock Exchange index of gold miners posted an overnight gain of 3.64 percent at 61.71 points.

AngloGold said it would cut its hedge book further, after it announced a 2.4 million ounce reduction in hedges in the quarter to the end of June.

Platinum firmed to $528/532 an ounce against New York's previous $526.20/534.20 while palladium was indicated at $317/324.00 compared with last New York close at $315.30/327.30.