Gold rises for 3rd straight day

Singapore - Gold rose for a third straight day on Wednesday, earlier jumping more than 1% as the euro extended gains against the dollar and equities bounced, spurring speculative buying ahead of a key US interest rate decision.

Wall Street was bracing for the Federal Reserve to unveil a cut of between 50 and 75 basis points from the federal funds interest rate, which stands at 1.5%.

"You might think gold would benefit from safe haven (buying) but on the other hand, the damage it might do to the stock market could possibly mean we would get some gold selling for margin calls again," said Darren Heathcote of Investec Australia.

"It's a little bit difficult to predict at this stage. The market is so very sensitive to the potential impact on growth of any Fed movement," he added.

Gold traded at $747.35 an ounce, up $3.05 an ounce from New York's notional close on Tuesday, when it also gained more than 1%. It hit an intraday high of $754.65.

Gold tumbled to a 13-month low of $680.80 on Friday after losses in equities markets drove investors to cash in bullion to cover losses. It has lost more than 20% in value since spiking to a record high of $1 030.80 in March.

Still in weak territory

"We are still in relatively weak territory, if you think historically. We are not out of the woods yet, so to speak," said Heathcote. "The market would take some convincing that the upward trend we've been seeing will continue and we'll get a recovery in gold," he said.

The euro rose to $1.2740 which in theory makes dollar-priced gold cheaper for holders of other currencies.

Asian stocks gave gold a shot in the arm, with the Nikkei rallying 7.5% on hopes the Bank of Japan might cut interest rates at a policy-setting meeting later this week.

"Technically, gold seems to have found a temporary base around the $700 support. However gains are likely to fade soon," said analyst Pradeep Unni at Richcomm Global Services, who expects selling to resume if gold regained $800.

"Key supports are at $720, $700 and $680 and resistance is at $745, $766 and $786," he said. Gold last traded around $800 last week.

Platinum erased a 6% gain made on Tuesday as worries about demand resufaced after US auto retailers swung to quarterly losses in the third quarter due to weakening US economy and hurricane-related damages.

Platinum was trading at $769.50 an ounce, down $39.50 from New York's notional close on Tuesday, when it hit an intraday high of $821.50.

New York gold futures rose $10.5 an ounce to $751.0.

- Reuters