Gold for June delivery at the COMEX division of the New York Mercantile Exchange was popping $12.70 to $1,292.70 an ounce. The gold price traded as high as $1,294.90 and as low as $1,278.90 an ounce, while the spot price was adding $12, or 0.94%.
"It's the beginning of a new quarter," Graham Leighton, a trader at Marex Spectron, said in a phone interview from New York when asked about the gains. "I thought the market was a little bit too bearish at the end of the quarter."
Gold futures dropped more than $10 on Monday, the last day of the first quarter, and continued to sell off into Tuesday. A large part of the selling in late March resulted from the de-escalation of the crisis in Crimea and the softening of tensions between Russia and Ukraine.
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Still, some support likely entered the market on Wednesday after India's government said it slashed the tariff on gold imports by 5.39%. This affects the trade because India is one of the largest purchasers of physical gold, and the tariff used to total 10%.
Fundamentally, Leighton said it's important to remember that new allocation comes in at the beginning of every quarter, meaning that Wednesday's pop may not suggest a trend.
Gold ETF SPDR Gold Trust (GLD) was rising 0.85% to $124.44 a share.
-- Written by Joe Deaux in New York.
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