Gold futures traded slightly higher on Tuesday after putting in their lowest settlement since March on Monday, following a plunge of more than 5% intraday in early Asian trading hours.

On Tuesday, December gold


was trading $4.20, or 0.2%, higher at $1,730.70 an ounce, a day after bullion skidded 2.1% for the lowest settlement since March 31.

Some strategists make the case that gold is under pressure on the back of the latest monthly U.S. jobs report which reignited the threat of the Federal Reserve tapering its monthly $120 million asset purchases and eventually raising benchmark interest rates, which currently stand at a range between 0% and 0.25%.

However, Monday’s selloff in gold may have been a bit overdone, due to thin volumes in Asia, with Japan and Singapore closed for holidays, James Steel, chief precious metals analyst at HSBC.

“This suggests an overreaction to the downside, and as trading went on substantial losses were cut,” Steel noted, referring to the worst of selling on Monday in Asian hours which saw gold fall by more than 5% intraday.

“This is quite encouraging for those still inclined to be gold bullish,” the analyst wrote.

The HSBC analysts also argues that a recent downshift in demand for gold by exchange-traded funds and other institutional buyers could be replaced somewhat by physical demand for bullion from jewelry stores and the creation of bars and coins.

“Jewelry, and bar and coin demand specifically could fill much of
the gap left by institutional investors. This type of buying surfaced in Asia and Europe, as well as the US, in response to the sell-off,” the strategist wrote.

Meanwhile, silver futures for September

were up 13 cents, or 0.6%, at $23.40 an ounce, after shedding 3.8% on Monday.

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