* Spot gold may edge up to $1,276 before falling -technicals
* Gold on Tuesday fell most in one day since Sept 2013
* Silver posted its largest one-day fall since Jan 2015 on
By Swati Verma and Sethuraman N R
BENGALURU, Oct 5 Gold rose on Wednesday,
recovering after hitting its lowest in more than three months in
the previous session, as the U.S. dollar eased from a two-month
high and stocks fell.
Spot gold was up 0.4 percent at $1,272.21 an ounce by
0645 GMT, after dropping more than 3 percent on Tuesday to its
lowest since June 24.
U.S. gold futures rose 0.4 percent to $1,274.60 an
ounce, after also falling more than 3 percent on Tuesday.
The dollar index, which measures the greenback
against a basket of six major currencies, slipped 0.1 percent on
Asian shares also edged lower on Wednesday and bond yields
were near two-week highs.
"Tuesday's fall was really a long liquidation and was
probably overdone. If the non-farm payroll data this week is too
good, then we might try another low," said Yuichi Ikemizu, head
of commodity trading at Standard Bank in Tokyo.
"Still, $1,250 would be a good support. I don't really
expect gold to go much lower from here and we could see steady
buyback toward $1,300 levels," Ikemizu said.
The drop on Tuesday was bullion's biggest one-day percentage
fall since September 2013 and brought spot gold to its lowest
level since Britain voted to leave the European Union in June.
"The market is clearly very long and someone started testing
the $1,300 levels, and there were more stops than buys," a Hong
Kong-based trader said.
Absence of Chinese buyers due to a week-long holiday robbed
the market of buyers who might have looked for bargains, the
On Tuesday, Bloomberg reported that the European Central
Bank would likely gradually wind down $90 billion in monthly
bond purchases before ending its quantitative easing programme,
citing unnamed officials at euro zone central banks.
"The ECB news added fuel to the fire because if the ECB is
thinking about tapering, then the path for gold is lower," said
Amit Kumar, research head at Adroit Financial Services.
"Easy money taken away is always gold negative."
Later, an ECB media officer tweeted that the central bank's
decision-making body had not discussed reducing the pace of its
monthly bond buying.
Spot gold may edge up to $1,276 per ounce to complete a
short-lived bounce before resuming its downtrend towards $1,260,
said Reuters' market analyst for commodities and energy
technicals Wang Tao.
Among other precious metals, silver edged up 0.6
percent to $17.88 an ounce, after falling 5 percent in the
previous session in its biggest one-day drop since January 2015.
Platinum gained nearly 1 percent to $990 an ounce,
after touching its lowest in more than three months on Tuesday.
Palladium was down 0.2 percent at $695.40.
(Reporting by Swati Verma and Nallur Sethuraman in Bengaluru;
Editing by Tom Hogue and Biju Dwarakanath)