Gold prices was marginally up on Wednesday, supported by the softness of the dollar and European equities, but unlike the metal continues to be limited as market players prepared for a hike in the US rates this month.
Gold for February delivery on the Comex tacked on 40 cents, or 0.04%, to trade at $1,075.80 a troy ounce.
Spot gold rose 0.4 per cent to $1,078.13 an ounce. The metal is about $30 higher than a near-six-year low reached last week.
The US dollar index, which measures fortress greenback versus a trade-weighted basket of six major currencies, was down 0.15% to 98.27. Listed commodities are cheaper for investors holding other currencies when the US dollar declines.
While investors widely expect the Fed Reserve to raise interest rates at its meeting on December 15 to 16 anticipate the rate increase is gradual. A gradual path to higher rates is seen as less of a threat for gold prices to a rapid series of increases.
The falling prices of raw materials, particularly crude oil, is also covered golden mouthed. Crude has fallen to its lowest level in almost seven years as OPEC keeps pumping oil near record amounts to defend the market share.
Weakness in oil might trigger fears of deflation, a bearish factor for gold, often used as a hedge against oil-led inflation.
Gold merchants chose to cover short positions on the dollar’s weakness. Net short positions by speculators in futures and options COMEX gold were at a record high in the week to December 1, the latest data show.
The investors have been driving betting that gold will soon drop to $ 1,000 an ounce, data showed options before the Fed meeting next week.
At the Multi Commodity Exchange, gold for delivery in April next year inches up by Rs 50 or 0.20 per cent to Rs 25,668 per 10 grams in futures trade on firm global cues.
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