Spot Gold Jumps Toward $1,850

The spot price of gold climbed as bargain hunters snapped up bullion amid choppy trade across stock markets and other industrial commodities.

Ahead of the New York day, spot gold was up $26, or 1.4% at $1,843.30 a troy ounce.

While European equities were higher after a mixed start, supported by strength in the retail sector, U.S. stock-index futures pointed to a more subdued open on Wall Street. Base metals were mostly lower on the London Metal Exchange, while agricultural commodities were mixed.

Analysts say market participants are waiting for speeches by U.S. President Barack Obama and Federal Reserve Chairman Ben Bernanke later in the day for direction heading into the weekend.

While gold looks likely to remain under some pressure in the near term, HSBC said lower prices may encourage Indian demand ahead of the Hindu festival season in October, a time of traditional gold gift-giving. The slip from record highs may also lure other price-sensitive buyers back into the market, HSBC analyst James Steel said.

Gold has rallied strongly in recent weeks as fears over global growth prompted a sale of risk assets, like equities and industrial commodities, and lured investors into perceived safe-haven investments, like bullion and core government bonds. Spot gold hit a record $1,920.94 an ounce last week.

The market has since, though, seen a sharp correction since then, prompting speculation over who or what caused the slide.

While there were some initial suggestions of a government seller in the market, traders say the sudden drop is now believed to have occurred after an incorrect order input.

"Instead of selling 80 lots, he/she is said to have sold 800 lots, which sprung the algorithm in the systems," said MKS Finance in a note to clients.

However, futures exchange operator CME Group said it was seeing continued volatility in gold futures. "We monitor all of our markets in real time and there were no busted trades [Wednesday]," an exchange spokesman said.

Despite the pullback, market players say it is only a matter of time before gold again surpasses its all-time high, with global growth fears continuing to haunt world financial markets.

UBS raised its gold forecast for 2012 by 50%, to $2,075 a troy ounce, citing expectations that further global economic disappointments, European debt troubles and low business, consumer and investor confidence will bolster demand for the precious metal as a "line of defense" against market turmoil.

Following a sharp upturn in prices since the start of July, UBS also revised its expected average gold price for this year. It now expects gold to average $1,665 an ounce in 2011, up from $1,500 an ounce previously, helped by a likely strong fourth-quarter price environment.

Among other metals, spot silver surged 70 cents, or 1.7% to $42.25 an ounce on the back of gold's gains. Spot platinum was up $22, or 1.2%, to $1,842 an ounce, and spot palladium gained $10, or 1.3%, to $759 an ounce.