March 10, 2006	Friday	Safar 9, 1427

LONDON, March 9: Gold rebounded on Thursday from its lowest level in three weeks following a pick up in physical demand, a recovery in oil and some weakness in the dollar, but investors remained cautious and waited for a sustained rise.

Silver also recovered after tumbling more than three per cent the previous day.

Gold fell 6.4 per cent on Wednesday from its 25-year peak of $574.60 an ounce last month, including 5.7 per cent dip since Friday, as investment funds abandoned their positions after a rise in the dollar, soft energy prices and on technical factors.

I don’t think this (drop) is enough to put investors off completely, there is still huge amount of money coming into commoodities, Stephen Briggs, economist at SG Corporate and Investment Banking, said.

But I do think it will be harder work getting back towards the highs now, he said.

Dealers said gold tried but failed a couple of times in recent weeks to breach recent highs as investors booked profits. It might struggle to jump again in the near term in the absence of fresh catalysts.

Spot gold rose as much as $547.20 an ounce and stood at $546.75/547.50 by 1104 GMT, compared with $542.60/543.30 in New York on Wednesday when it slipped 1.6 per cent to three-week lows on fund-led selling.

The price drop attracted buying interest from jewellers and investors in India, Indonesia, Thailand and Malaysia.

Consumers in India, the world’s largest gold buyer, have begun buying gold to meet their needs in the wedding season, which peaks in April and May, dealers said.

The sharp price falls have seen the beginnings of some bargain hunting by consumers and investors, although whether this will be enough to turn the markets higher remains to be seen, Alan Williamson, analyst at HSBC Bank, said in a report.

Oil prices rose after losing nearly 6 per cent.

Spot silver rose to $9.87/9.90 an ounce from $9.84/9.87 in New York on Wednesday when it lost three per cent.

Silver has become the latest flavour of the month. For the time being, you can expect to see silver continuing to outperform gold, Briggs said.

Platinum rose to $1,015/1,019 from $1,008/1,012 an ounce in the US market. It had touched a three-week low of $999 an ounce the previous day. Palladium was at $282/286 an ounce, versus $277.50/281.50.—Reuters