Gold regains some ground as growth concerns take centre stage

Gold prices edged higher on Wednesday after a steep fall in the previous session, as concerns about global growth slowdown weighed on risk sentiment while investors awaited the European Central Bank`s tapering strategy.

Spot gold was up 0.2% at $1,797.30 per ounce by 0934 GMT, after falling to an over one-week low of $1,791.90 on Tuesday. U.S. gold futures were steady at $1,799.20.

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"Gold is holding up quite well towards $1,800. There is bit of concern about growth and we are seeing some weakness in the in the equity market," said Xiao Fu, head of commodity market strategy at Bank of China International.

"Gold prices are in a bit of range bound market because there`s buying on dips. The demand is still very strong in the gold market when prices dip."

European stocks fell 1% as worries about slowing global growth dented risk appetite in run up to ECB meeting on Thursday. 

Austria`s central bank chief Robert Holzmann, considered as a hawkish member of the ECB, said the central bank could tighten policy sooner than many expect as inflationary pressures could prove to be persistent.

"There may be some influence from the ECB meeting if the meeting is more dovish than expected," Nicholas Frappell, global general manager at ABC Bullion said.

"In the very short term, I expect gold to recover to $1,807, possibly $1,815."

Meanwhile, limiting gold`s appeal, the dollar index rose to a one-week peak against major peers, buoyed by higher Treasury yields.

Rising COVID-19 cases weighed on U.S. job growth recovery last month, triggering speculations that the Federal Reserve could delay tapering.

Gold is often considered a hedge against inflation and currency debasement, caused by massive stimulus measures.

Elsewhere, silver was steady at $24.30 per ounce, platinum was flat at $998.80 and palladium fell 0.6% to $2,357.51.