NEW YORK (MarketWatch) -- Gold futures rose sharply to close above $900 an ounce Wednesday, rebounding after a decline in the previous session, as the dollar edged lower against most other major currencies.
Gold for April delivery surged $14.70, or 1.6%, to end at $905 an ounce on the New York Mercantile Exchange.
"The light bargain-hunting that emerged overseas during the night continued into the New York session," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note. "In addition, some flight-to-safety purchases were also seen today."
On Tuesday, gold futures declined $19.10 to finish at $890.30 an ounce.
Over the past few days, the gold market sold off in another global liquidity crunch as funds exited gold trades to meet cash margin requirements and to free up capital in general, said Zachary Oxman, a senior trader at Wisdom Financial.
However, "fundamental factors that support this market continue to be unchanged, which is another reason why I feel that the gold moves of this week to the downside were nothing but short-term liquidity plays that will not hold," Oxman said.
"The market is seeing a re-investment of fund money, strength in the Indian rupee, a positive seasonal pattern and concerns over power outage issues," Oxman said.
Gold prices have been supported in recent days by electricity shortages in South Africa that had shut down the country's major mines for several days.
The dollar drifted lower against the yen Wednesday and reversed earlier losses against the euro, but stuck within recent ranges of most of its major counterparts as investors awaited European Central Bank and Bank of England monetary policy meetings Thursday. See Currencies.
The dollar index, which tracks the performance of the greenback against a basket of six major currencies, was at 76.099, compared with 76.120 in late U.S. trading Tuesday.
Also on Nymex, March silver rose 20.50 cents at $16.550 an ounce, April platinum surged $33.50 at $1,819 an ounce and March palladium gained 35 cents to end at $423.45 an ounce.
Copper for March delivery rose 9.70 cents at $3.3090 a pound.
Crude-oil futures declined sharply after the U.S. Energy Department reported that crude inventories rose by 7 million barrels to 300 million barrels in the week ending Feb. 1, well above market expectations
