Gold Bullion rallied to $1725 per ounce Thursday morning, recovering some ground after yesterday's sharp drop during US trading, as stocks, commodities and the Euro also gained and US Treasury bond prices fell.

Silver climbed to $33.87 an ounce, 2.7% up on yesterday's low but 0.9% down on this week so far.

Gold fell more than $30 an ounce in an hour Wednesday, dropping 1.5% in just a few minutes. Gold trading volume on the New York Comex futures and options exchange was more than double its 250 day average, according to Reuters.

Silver also fell Wednesday, with Bloomberg reporting the highest silver Comex volumes since May 2011, although silver rebounded more quickly than gold and was back to within a few cents of its pre-crash level by the time US markets closed.

Despite yesterday's fall, "we don't think anything has materially changed for gold," says a note from UBS.

"Essentially the metal is back to where it was trading last week. This is another test of downside buying interest but it also highlights the commitment issues that reside when the market attempts to climb higher."

Online gold exchange BullionVault saw the number of customers adding to their gold holdings triple on Wednesday compared to a day earlier.

The volume of bullion held by gold exchange traded funds meantime rose to a fresh all-time high Wednesday, according to Bloomberg data. The world's biggest gold ETF SPDR Gold Shares (GLD) also saw holdings set a new record at just over 1347 tonnes, a 1.2 tonnes rise from the previous record set a day earlier.

A spokesman for Comex operator CME Group denied yesterday's fall in gold prices was the result of a so-called 'fat finger' trade, a term used to suggest human error. Nor was stop logic triggered, the spokesman added, meaning that the fall was not sufficiently rapid to trigger a pause on CME's electronic Globex trading platform.

"Gold probably saw some additional pressure from technical stop loss selling," CME's mid-session gold report said Wednesday, "as the gold market fell through a series of key chart points."

"Some players blamed the lack of fiscal cliff progress undermined gold and other commodities," added the exchange operator's end –of-day gold market report.

"But if that was the focus of the trade one might have expected gold to have bounced more significantly into the President's White House Press conference."

President Obama yesterday urged voters to use social media website Twitter to put pressure on their representatives in Congress to reach a deal on the so-called fiscal cliff of tax rises and spending cuts currently scheduled for the end of the year.

"We don't have a lot of time here," Obama said. "We've got a few weeks to get this thing done...the Senate's already passed a bill that keeps income taxes from going up on middle class families. Democrats in the House [of Representatives] are ready to vote for that same bill today. If we can get a few House Republicans to agree as well, I'll sign this bill as soon as Congress sends it my way."

Republican Congressman Tom Cole of Oklahoma suggested this week that Republicans should support the bill.

"We all agree that we're not going to raise taxes on people who make less than $250,000," said Cole.

"We should just take them out of this discussion right now, continue to fight against any rate increases, continue to work honestly for a much bigger deal."

Republican House Speaker John Boehner rejected Cole's suggestion Wednesday. Boehner added however that he is optimistic a deal can be agreed.

Treasury secretary Timothy Geithner will today hold talks with Congressional leaders on the subject.

US hedge fund SAC Capital meantime was issued with a so-called Wells Notice by the Securities and Exchange Commission Wednesday, informing SAC that it will face charges over insider trading. 

The world's number four gold producer Gold Fields announced today that it plans to spin off two of its South African mining sites as part of a business restructuring. The two sites, Beatrix and KDC, have both been affected by strike action in recent weeks.

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