Gold Steadies as Stocks, Dollar Edge Higher

Published: 12th January 2016 04:42 PM  |   Last Updated: 12th January 2016 04:42 PM   |  A+A-

LONDON: Gold steadied on Tuesday after two days of losses, but remained under pressure as the dollar edged higher against a currency basket and a firmer tone to stock markets undermined the metal's appeal as a haven from risk.

An early January rally driven by a rout in global equities ran out of steam late last week after gold hit chart resistance at its 100-day moving average at $1,108 an ounce. Gains have also been capped by concerns over higher U.S. interest rates.

Spot gold was at $1,094.20 an ounce at 1031 GMT, little changed from late on Monday, while U.S. gold futures for February delivery were down $1.80 an ounce at $1,094.40.

The metal has retreated after hitting a two-month high on Friday in a rally driven by a slump in oil prices and world shares on fears over the health of the Chinese economy.

"The Chinese stock market crash and the unease it's created in the market that the government isn't able to control the economy the way it wants to has lifted gold prices higher," Natixis analyst Bernard Dahdah said.

"But generally, (we expect) gold to be below $1,000 this year," he said. "The market will be focused on what the Fed decides - if the Fed delays a rate hike, the price of gold will benefit, or if the inflation figures improve, we could see gold prices dropping."

Gold prices retreated from an overnight high of $1,099.15 on Tuesday as European stocks rebounded from an early three-month low and the dollar index rose 0.2 percent.

The metal fell more than 10 percent last year, largely on the back of expectations that the Federal Reserve is set to normalise U.S. interest rates. Ultra-low rates, which cut the opportunity cost of holding gold while weighing on the dollar, were a key factor driving gold to record highs in 2011.

The Fed raised rates in December and attention has shifted to how many hikes will follow in 2016.

Atlanta Federal Reserve Bank President Dennis Lockhart said there may not be enough fresh data on inflation to support another U.S. rate hike by March.

Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 2.1 tonnes on Monday, data from the fund showed.

Among other precious metals, palladium was the biggest faller, sliding 5 percent to a 5-1/2 year low of $449.55 an ounce in early trade. It was later at $464.70 an ounce, down 3.1 percent.

Silver was flat $13.85 an ounce, while platinum was down 0.5 percent at $839.02 an ounce.


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp