Gold futures rose sharply Wednesday, gaining from its steep decline in the previous session, as the dollar traded near an all-time low against its major counterparts and crude oil prices continued to fuel inflation jitters.
Crude oil soared past $100 a barrel as OPEC ministers agreed to keep cartel members' production levels unchanged at a meeting today in Vienna. The dollar dropped 14 percent against the euro in the past year, including a 4.2 percent drop since Dec. 31.
Gold for April delivery gained $21.10 at $985 an ounce on the New York Mercantile Exchange. Before today, the metal rose 15 percent this year. On Tuesday, gold futures dropped $17.90 to close at $966.30 an ounce.
Gold moves in line with oil prices as investors hedge against inflation, and in the opposite direction to the dollar as bullion is seen as an alternative asset.
Bargain-hunting support has been found this morning and given the still negative outlook for both the U.S. economy and the greenback, it does seem inevitable that gold will challenge $1,000 an ounce in the near future, said James Moore, an analyst at TheBullionDesk.com, in a research note.
Short-term though, gold is still vulnerable to profit-taking, although yesterday's correction has pulled the metal out of overbought territory, Moore said.
The U.S. dollar edged lower against its major counterparts after the ADP employment index reported that the nation's private-sector employment rolls dropped by 23,000 net jobs in February.
The dollar index, which tracks the performance of the greenback against other major currencies, dropped 0.1 percent to 73.59.
Also on Nymex, silver for May delivery gained 32 cents at $20.16 an ounce. Crude oil rose$3.58 to $103.10.
April platinum futures dropped $77, or 3.4 percent, to $2,190 an ounce and June palladium declined $32.95, or 6 percent, to $537.50 an ounce.
Copper for May delivery gained 3 cents at $3.85 a pound.