Gold prices held below a five-week high near $1,200 an ounce on Wednesday as a rise in oil prices provided support, but strengthening dollar curbed demand for a store of value, with a U.S. policy maker saying the Federal Reserve is getting closer to replacing its vow to hold rates low for a considerable time.
Bullion was also supported by entries of 2.4 tons in SPDR Gold Trust. Although the first entry within two weeks, holdings of firm bottom seat near a minimum of six years, underscoring the bearish sentiment in the market.
Bullion for immediate delivery climbed up and down 0.3 percent and was trading at $ 1200.86 an ounce in Singapore from $ 1198.28 yesterday, when prices fell 1.1 percent, according to Bloomberg. The metal on Dec. 1 slumped to a three-week low of $ 1142.88 before rebounding to $ 1,221.43, the highest level since October 30, as the oil whipsawed.
“Prices of the precious metals have fallen from grace since July. For starters, the US dollar has gathered. Furthermore, the inflation expectations have diminished considerably because a sell-off in oil prices” 100McxTips Bullion Analysts said.
Bullion has dropped in tandem with oil in the last sessions on expectations that weaker oil prices could reduce inflationary pressure. The metal is usually seen as a hedge against higher prices.
Oil rallied more than 1 percent late on Wednesday, but Brent and US crude has fallen more than 30 percent since June and five-year lows touched earlier this week on fears of supply.
Bloomberg spot dollar index was the highest since 2009, ahead of the data this week that may show American employers to added more than 200,000 jobs for a tenth month, boosting the case for tighter monetary policy stimulus in Europe and Japan increases.
Optimistic comments made by two influential Fed officials emphasizing the positive impact on the US economy fall in oil prices contributed to the fortress of the US currency.
Gold for February delivery settled at $ 1,200.30 an ounce on the Comex in New York at $ 1199.40 yesterday. Prospective fell to a three-week high of $ 1,141.70 on Dec. 1 after Swiss voters have rejected a plan for the central bank to buy bullion.
In the domestic marketplace, today, gold-silver is trading very slow. Yesterday strongly dollar increased the pressure on gold. But today in gold trading around the level of yesterday. MCX gold with 0.75 per cent rise, is trading at Rs 26 388.
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