Gold futures on Tuesday recouped all of what they lost a day earlier, reclaiming the $1,200 level as tensions in the Middle East and nagging worries over debt woes in Greece helped lift safe-haven investment demand for the metal.
Gold for June delivery on Comex rose $9.40, or 0.8%, to settle at $1,203.10 an ounce after losing 0.8% on Monday. May silver rose 11.9 cents, or 0.8%, to $16.008 an ounce.
“We have too much ambiguity in the market and this is playing in favor for gold,†said Naeem Aslam, chief market analyst at AvaTrade.
Among the factors he mentioned, the market has been mulling the possibility of Greece leaving or getting kicked out of the eurozone, and the U.K. elections are coming up next month with the looming threat that the country could head toward referendum on its membership of the European Union.
Added to all that, India celebrated its Akshay Tritiya holiday on Tuesday, which usually lifts demand for gold by nearly 20%, according to Aslam.
But as of Wednesday, Indian gold demand will only rise if there is a sustained price fall in gold or if there is a clear indication that prices for the metal rise in the short term, said Chintan Karnani, chief market analyst at New Delhi-based Insignia Consultants.