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Gold prices clawed their way out of bear market territory Thursday as June NYMEX gold futures spiked over $40 to more than $1575 an ounce, posting the biggest one-day gain of the year.
In the previous session, gold plummeted to its lowest price in 10 months, dropping 20 percent from its all-time high above $1900 to a $1526 intraday low. Technical analysts say that low may have sparked the rally.
"Look for buying interest near 1520 to underpin a near-term uptick toward the 1600 area," Barclays analysts wrote in a note to clients Wednesday night.
Throughout the recent sell-off, gold bulls maintained the precious metal's more than decade-long rally would remain intact. Gold has gained a stunning 409 percent in the past 10 years.
Another factor in the gold reversal may be a change in investor sentiment. Ongoing concerns about the economy seemed to have rekindled a flight to safety in gold, traders say.
"There has been a reevaluation of gold now. There's a cautious flight to quality that's attracting buyers", says gold options trader Anthony Neglia of Tower Trading NYC. Some traders may also be covering short positions, especially after a disappointing U.S. manufacturing report, some traders say.
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