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.
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.