US gold and silver futures rebounded to finish higher on Thursday on physical buying and rising oil prices, and as data showed that inflation pressures were stronger than expected.
Analysts, however, said that some investors could be on the sidelines because of a lack of strong bounce following a sell-off this week and ahead of the second quarter's final trading day on Friday.
"We are seeing that physical buying has stepped up and the volume of selling has certainly eased off from what was seen in the week," said Paul McLeod, vice president of precious metals at Commerzbank in New York.
Most-active gold for August delivery on the Comex division of the New York Mercantile Exchange settled up $5.60 at $650.40 an ounce, after dealing between $645.50 and $652.50.
Government data showed on Thursday that the US economy grew at a 0.7 percent annual pace in the first three months of this year, the weakest in more than four years but slightly better than previously estimated.
However, the report's inflation gauge, the Personal Consumption Expenditures prices index, showed price pressures were stronger than expected. After the conclusion of Thursday's Comex pit session, the Federal Reserve in its post-policy-setting meeting statement dropped the word "elevated" from its description of core inflation.
It also held the benchmark US interest rates steady at 5.25 percent. "Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated," the Fed said.
Gold is usually seen as a hedge against inflation. US oil futures ended up 60 cents at $69.57 a barrel for the day. They had jumped as much as more than 2 percent at above $70 a barrel in trading. Comex estimated final volume at a modest 90,173 lots, and gold options at 6,919. Turnover at the Chicago Board of Trade's electronic 100-oz gold futures were 18,412 lots at 2:21 pm.
Comex September silver closed up 17.6 cents, or 1.4 percent, to $12.505 an ounce, dealing between $12.385 and $12.590. September silver had tumbled as much as 7 percent this week before on Thursday's rebound, while gold had also slumped as much as 2.4 percent.
"The support now was basically just a bounce back from yesterday," Jim Geezer at Rooks Futures said from the Comex floor. Geezer said that silver futures could test the area below $12 an ounce in the near term and he pegged support at around $11.75 an ounce.
"I think there are certainly more downside risks existing in silver at the moment than in gold," McLeod said. Spot gold rose to $647.90/$649.40 an ounce, compared with $642.50/644.00 an ounce late on Wednesday. The London afternoon gold fix was set at $647.25. Spot silver was quoted at $12.41/12.46 an ounce, above the late on Wednesday quote of $12.26/12.29. London silver was fixed at $12.425 an ounce.
Nymex October platinum ended up $2.20 at $1,286.00 an ounce. Spot platinum traded at $1,272/1,279.00 an ounce. September palladium finished up 85 cents at $368.70 an ounce. Spot palladium fetched $363/367.
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