new York 10 26, 2012, 01:40 IST
Gold rose above $1,700 an ounce on Thursday, a day after it fell under that threshhold, boosted by encouraging United Kingdom GDP growth data and expectations the Bank of Japan will further loosen its monetary policy.
Bullion, a traditional inflation hedge, climbed after data showed Britain posted its strongest quarterly economic growth in five years, although temporary effects may have masked a weaker underlying picture.
"The nice U.K. report suggested that the global economy is rebounding slowly, and the fund liquidation we saw earlier this week seems to have dried up," said Bill O'Neill, partner of commodity investment firm LOGIC Advisors.
Gold rebounded from a seven-week low hit on Wednesday after the U.S. Federal Reserve stuck to its plan to keep stimulating growth until the job market improves but offered few positive surprises.
Spot gold was up 0.6 percent at $1,712.39 an ounce by 3:11 p.m. EDT (1911 GMT), rebounding from Wednesday's low of $1,698.39.
U.S. COMEX gold futures for December delivery settled up $11.40 an ounce at $1,713, with trading volume about 20 percent below its 30-day average, preliminary Reuters data showed.
Bullion rallied to an 11-month peak above $1,795 an ounce in early October after the Fed's latest program of purchasing mortgage-backed debt stirred inflation worries.
Momentum has since stalled, leaving prices vulnerable to swings in wider markets, with weak global economic data helping send prices below $1,700.
Also, speculation that the Bank of Japan will unveil further monetary stimulus boosted gold. Sources told Reuters the Bank of Japan is expected to ease monetary policy next week by expanding asset purchases.
Silver climbed 1.5 percent at $32.13 an ounce.
INDIAN BUYING EYED
The lower prices were also drawing in new buyers, with dealers anticipating a pickup in demand from India before the Hindu festive season peaks next month with Diwali, which marks the start of the wedding season, a major gold-buying event.
Gold's outlook also hinges on uncertainty related to the November 6 U.S. election and the so-called "fiscal cliff," a series of automatic spending cuts and tax increases in 2012 if Congress fails to reach a deficit reduction deal by the end of the year.
In official-sector activity, IMF data showed Venezuela and Russia cut holdings, taking advantage of the historically high price of gold.
Platinum group metals also rebounded after they suffered heavy losses earlier this week as economic worries hit demand.
Platinum was up 0.4 percent at $1,560.75 an ounce, while palladium gained 1.9 percent to $600.60 an ounce.
