LONDON: Gold rebounded sharply on Monday from the 2 percent losses it posted after Switzerland voted against a proposal to boost its gold reserves, as lower prices tempted fresh buyers and Moody's cut its rating on Japan.
Swiss voters overwhelmingly rejected on Sunday a proposal to boost central bank gold reserves, providing a new trigger for sell-offs in an already nervous market. Gold slid as low as $1,142.91, before bouncing back in European trading hours.
Spot gold rebounded to a high of $1,182.70 an ounce, and was up 1 percent at $1,179.00 an ounce at 1040 GMT. U.S. gold futures for December delivery were up $2 an ounce at $1,177.50.
News that global rating agency Moody's had cut Japan's sovereign rating, sending the Japanese yen to a seven-year low against the euro, stimulated some demand for gold, traders said.
"The market had been focusing on the Swiss referendum, and the reaction to that was overdone on the downside," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said. "Then the Japanese rate cut caught a raw nerve."
Risk appetite was slack on the wider markets, with European stocks falling 0.5 percent and oil prices hitting their lowest in five years, hurt by slowing factory activity in China and Europe.
Investment interest in gold has been lacklustre. Holdings of the world's largest gold-backed exchange-traded fund, New York listed SPDR Gold Shares, fell another 1.2 tonnes on Friday to 717.6 tonnes, a 6-year low.
Gold received supportive news from the physical markets, however, where India, the second biggest consumer of the metal, eased curbs on imports on Friday.
In top consumer China, premiums were steady at about $1-$2, reflecting strong buying interest.
Silver was up 2.7 percent at $15.83 an ounce, having earlier rallied as much as 6 percent to a peak of $16.34. Overnight it slid as low as $14.42, while U.S. silver futures tumbled as much as 9 percent.
Spot platinum was up 0.6 percent at $1,203.70 an ounce, while spot palladium was down 0.4 percent at $801.90 an ounce.
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